CHICAGO - Cook County, Ill., president Todd Stroger yesterday unveiled a fiscal 2009 budget of just under $3 billion that avoids new taxes or fee increases, but critics blasted it as being propped up by stalled plans to borrow $360 million to finance pension obligations and self-insurance claims.

The proposed spending plan was quickly attacked by critics on the 17-member county board as a "2010 re-election budget" that relies on borrowing despite a recent controversial sales tax increase imposed earlier this year that's expected to generate up to $400 million in additional annual revenue.

The borrowing plans had been approved as part of the current budget, but approval of the financing teams has been stalled. County officials warned that without the proceeds of the financings they would need to implement layoffs and budget cuts, and the county pension fund would be forced to liquidate assets to make its payments.

Stroger's proposed $2.94 billion spending plan represents a 0.02% increase over the current plan and trims the county's roughly 24,000-person workforce by 561 positions. The budget includes a $45 million increase for the county's massive and fiscally troubled hospital system, which accounts for about a third of the overall budget and was taken over this year by an independent board of medical and financial professionals.

The increase in health care spending was offset by cuts in other areas, according to Stroger. Calling the budget a "pathway of reform, efficiency, and modernization," he said the focus of the budget was long-term financial management. As of yesterday afternoon the county had not provided copies of the budget to the public or press, so details were scarce. After unveiling the budget, Stroger spent most of a press conference defending an increasingly controversial plan to issue $104 million in pension obligation bonds and $260 million in self-insurance bonds. A third bond issue - $376 million for capital improvement projects - is less controversial.

Though the board approved the bond issues in September - as well as an authorization that would allow the county to refund roughly $3 billion in debt - it recently has blocked the administration from going to market by refusing to sign off on the finance team put together for the transaction.

With the county facing a Nov. 30 deadline to make a pension payment, the pension board last week sent a letter to retirees warning that unless the board approves the borrowing plan, the fund may be forced to liquidate assets, a move that would likely lead to losses.

"This was obviously a scare tactic and was a whole new low" for the administration, said Commissioner Mike Quigley., A frequent Stroger critic, Quigley recently announced he would run for the U.S. House seat soon to be vacated by Rep. Rahm Emanuel, President-elect Barack Obama's pick for new White House chief of staff.

"This board has never failed in its obligations," Quigley said. "There are some financial issues to be worked out, but don't take that out on the senior citizens."

Critics, including county commissioners and the Civic Federation of Chicago, a fiscal watchdog group, said pension and self-insurance payments, as operating expenses, should be paid out of existing revenues, not borrowing.

Despite the controversy, Stroger said he expects the board to sign off on the borrowing plan "as part of sound fiscal practice."

The county will hold public hearings on the budget over the next few months. The board has until Feb. 28, 2009, to pass a final budget.

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