CHICAGO – Cook County, Ill., commissioners signed off on a $4.9 billion 2017 budget that relies on spending cuts and a new sweetened beverage tax to erase red ink due in part to growing debt service and pension expenses.
The board approved the budget in an 11-4 tally Tuesday with Republican members casting the opposing votes. The vote followed the board's narrow approval of the beverage tax late last week. Board president Toni Preckwinkle was forced to cast the tiebreaking vote.
"Developing this budget has been a grueling experience," Preckwinkle said in a statement after the budget vote. "Almost exactly a year ago I cautioned that fiscal year 2017 would be a challenge and I believe we have responded with a responsible and responsive budget."
The county headed into budget season with a $174.3 million hole to plug. Delayed state payments because of the ongoing state budget impasses, flat or declining revenue growth, and rising costs for technology upgrades contributed to the shortfall.
The budget closes the gap through a mix of cuts, which include layoffs, and the new tax. It is expected to generate $73.7 million in fiscal 2017. The penny per ounce tax takes effect in July, midway through the budget year, so it's expected to generate double that in future years.
Preckwinkle portrayed the tax as the best means to protect county funded health and public safety expenses from cuts while also improving the health of residents, who may opt to cut their consumption of sweetened beverages due to the higher costs.
The budget plan includes a $4.4 billion operating plan and $475.7 million capital budget. The board also voted to limit any sales tax or property tax hikes over the rate of inflation for three years.
Cook is Illinois' largest county and covers Chicago and neighboring suburbs.
Total fiscal 2017 general fund expenditures are expected to rise, driven primarily by the county's plan earmarking an increase in sales tax dollars to help stabilize its pension system. The county is tapping a 1% sales tax hike to cover supplemental payments to its pension fund to bring the system to a 90% funded ratio in 2046. The county's system currently carries $5.9 billion of unfunded contributions are just 60% funded.
The county's general obligations are rated A2 by Moody's Investors Service, AA-minus by S&P Global Services, and A-plus by Fitch Ratings. Ahead of a refunding earlier this year, Moody's and Fitch revised the county's outlook to stable from negative while S&P downgraded the rating one notch. S&P assigns a stable outlook.
