CHICAGO — The election of a new administration to rule Cook County presents a rare chance to overhaul the county’s troubled fiscal policies and government structure, a Chicago-based watchdog group
The Civic Federation report warns that the county, the nation’s second-largest, needs to implement major reforms to modernize an outworn government structure and eliminate an unprecedented deficit looming in fiscal 2011.
The report features quick-fix reforms for the new administration to implement in its first 100 days as well as long-term changes that would dramatically change the county’s structure.
The report comes ahead of next week’s election for Cook County Board president, where veteran Chicago alderman and Democrat Toni Preckwinkle faces Republican challenger Roger Keats and Green Party candidate Tom Tresser. Preckwinkle is favored. The new administration takes control Dec. 6.
“The problems facing the county are daunting, but a board president with courage and vision can make a clean break from past practices and give county residents the government they need and can afford,” Civic Federation president Lawrence Msall said in a statement. “If not undertaken now, with a commitment to meaningful reform, Cook County will experience a continuation of eroding services and increasing tax rates.”
On the debt side, the group warns that the double-A rated county’s growing debt burden could mean an erosion of services without new revenue. Cook currently has $3.6 billion of outstanding long-term debt.
That’s an increase of $1.5 billion, or 69%, over the past decade, according to the federation. Most of the new debt was issued to fund capital projects and a piece of it was issued to finance pension obligations. Debt service has increased 59% since 2001.
“As debt-service levels increase, the county is pressured to either cut services and divert other revenues previously used to fund operations or raise new revenues to make its required payments,” the report said. “If neither action is taken, increasing debt-service levels can lead to deficit spending over time.”
The federation suggests that the county stop issuing bonds to finance the purchase of capital equipment, which often has a short life relative to the life of the debt. Instead, officials should adopt a capital reserve policy to finance the purchase and maintenance of equipment.
At the top of the new board president’s priorities should be erasing the deficit and repealing the rest of an unpopular 2008 sales tax hike, the report said.
Estimates of the size of the 2011 deficit range from $300 million to $500 million. During the last 10 years, expenditures have grown by 37% or $961 million and revenues increased 33.3%, the report noted. Most cuts would have to be made in personnel, which accounts for 80% of general fund spending.
Despite the deficit, Cook County should quickly repeal the two-year-old sales tax hike that gave Chicago one of the highest rates in the country and hurt retail sales, according to the report.
Current President Todd Stroger won board approval to enact the 1% sales tax increase in 2008, arguing new money was necessary to balance a growing structural deficit and hospital system losses.
The tax hike sparked major opposition — many say it was the reason Stroger lost the Democratic primary to Preckwinkle in February — and earlier this year the board repealed half of the one percentage point.
Repealing the remaining half would drop the rate to 0.75% and reduce Chicago’s overall rate to 9.25% from 9.75%. “The sales tax increase allowed the elected officials to avoid addressing the underlying cost drivers that made reemergence of the deficit inevitable,” the report said.
Over the long term, the federation urged Cook to create special service areas in incorporated areas where it currently provides services, create a new revenue stream solely for the massive health and hospital system, and separate the forest preserve system from the rest of county government.
Like most municipalities, Cook County needs to overhaul its retirement system, the report said. Its funded ratio has fallen to 63.2% from 94% over the last decade.
