CHICAGO – While Cook County, Ill. plots out its new money borrowing planned for later this year, finance officials will also work to close a looming $174 million gap.
The red ink that looms in the county's next budget was announced by board president Toni Preckwinkle in an annual preliminary forecast.
The county attributes the shortfall to state budget gridlock that has delayed passed of state fiscal 2016 and 2017 budgets, growing legacy debt service costs, and increased technology spending needed to upgrade aging systems.
The looming deficit comes on top of a projected $48 million shortfall in the current budget. The county will cut spending to shore up the 2016 plan.
"To close the fiscal year 2016 budget shortfall and address the fiscal 2017 gap, we will have a number of tough decisions to make over the coming months," Preckwinkle said in a statement.
While state lawmakers approved a partial budget last week, gridlock over how to achieve a balanced, long term plan will "influence decisions necessary to form the fiscal year budget," the county said.
The state owes Cook $53.1 million with an additional $57.4 million due to its hospital and health care system for fiscal 2016.
Total fiscal 2017 general fund expenditures are expected to rise, driven primarily by the county's plan earmarking higher sales tax collections to help stabilize its pension system.
The county will contribute an additional $80 million next year while transportation infrastructure will see a $54.5 million increase and debt service will rise $30 million.
Personnel costs and healthcare expenses are on the rise, with an additional $65 million needed while general fund revenues are projected to decline by 4% even with additional sales tax collections expected from a rate increase. The county expects flat or even a decrease in some taxes like cigarette and tobacco product taxes.
The county said it would look to contract savings, delay hiring, and would implement additional personnel and non-personnel holdbacks to help erase the red ink. The budget will be unveiled in October with a vote expected in November.
Cook recently refunded $285 million of debt and is planning a new-money issue later this year.
The county's GOs are rated A2 by Moody's Investors Service, AA-minus by S&P Global Services, and A-plus by Fitch Ratings. Ahead of the refunding, Moody's Investors Service and Fitch Ratings both revised the county's outlook to stable from negative while S&P downgraded it one notch. At AA-minus it remains Cook County's highest rating. S&P assigns a stable outlook.
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.