CHICAGO - With the Chicago City Council set to vote tomorrow on a $6 billion 2009 budget, officials on Monday announced an agreement with their unions that will save about 145 jobs slated for elimination as part of Mayor Richard Daley's measures to erase a $469 million deficit.

The budget unveiled by the mayor last month called for the cutting of 2,628 positions through a mix of eliminating vacant jobs and 929 layoffs, but city officials and union representatives have been negotiating various work-rule changes and other incentives that could lower the figures.

Under the agreements announced by Chicago chief financial officer Paul Volpe yesterday, union employees will take one unpaid furlough day next year and employees with at least 10 years on the job will be offered buyout packages of between $5,000 and $15,000. Unions also agreed to certain work changes aimed at saving money.

"Mayor Daley directed us to continue our work with the unions to reach agreements that would reduce the number of layoffs while protecting taxpayers by not further burdening the corporate fund - that is what we present today," Volpe said.

The announcement comes as the City Council is wrapping up hearings on the budget and a vote before the full council is expected at a meeting tomorrow. The original job cuts helped the mayor win the endorsement earlier this month of the fiscal watchdog group, the Civic Federation of Chicago

"Chicago has no responsible choice other than cutting personnel spending to balance this budget," said Laurence Msall, president of the federation. The group contends that personnel costs make up more than 82% of the operating budget and must be cut amid faltering revenue collections.

In addition to the job cuts, the $469 million shortfall in both the current 2008 and proposed 2009 budgets would be erased by tapping into the proceeds of two asset-lease transactions, tax and fee increases, spending cuts, other management initiatives, and debt restructuring. Property taxes are not being raised.

Officials expect to save about $60 million from the restructuring of some existing debt, including $41 million this year and another $19 million next year. The savings likely will come from extending some maturities.

Some of those savings are expected in a $650 million general obligation issue slated for the week of Dec. 1. The deal includes $350 million of new money and $300 million of refunding bonds.

"The approximately $300 million in debt restructuring will be used to achieve budget relief through 2012 - this is consistent with the mayor's plan of taking a four-year approach to ensure we mitigate the impact of this ongoing recession on the city's finances," said budget spokeswoman Lisa Schrader.

No additional details on the restructuring have been made available. William Blair & Co. is senior manager and Mesirow Financial Inc. is co-senior.

Chicago will use $40 million from the $100 million of unrestricted proceeds it expects to receive from the proposed $2.52 billion lease of Midway Airport. The city would tap the $100 million in $20 million increments over five years. The deficit fix also relies on $150 million from its proposed long-term lease of its parking meter system.

Over the long-term, the federation has raised red flags over Chicago's financial health. Its report cited officials' expectation that the city will enter 2009 with an unreserved balance of just $1.5 million. Fitch Ratings rates Chicago's $6 billion of GOs AA, Moody's Investors Service rates them Aa3, and Standard & Poor's rates them AA-minus.

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