CHICAGO -- Cook County, Ill. President Toni Preckwinkle Thursday unveiled a nearly $3 billion fiscal 2013 spending plan for the nation’s second-largest county that relies on the new federal health care law as well as taxes on bullets, guns, cigarettes, and gambling to cure a $267 million shortfall.

County officials are expecting federal approval of a so-called 1115 waiver within the next few weeks, which would allow the county to expand its Medicaid program starting in 2013 as opposed to waiting until 2014, when the Affordable Care Act formally takes effect. The expansion would bring in $98 million -- the largest piece of Preckwinkle’s plan to bring down the 2013 deficit.

The county hospital budget, which traditionally makes up about a third of the county’s overall budget, would rise to $966 million from $894 million, in part to accommodate the expansion, according to officials.
If approved, the Medicaid expansion would mean the federal government would start picking up the tab for more than 100,000 patients that the county is already treating but not reimbursed for, according to Preckwinkle.

“This is a historic opportunity for us,” Preckwinkle told the board of county commissioners during her budget presentation. “After trips to Springfield and D.C., we’ve had countless meetings, and the 1115 waiver is within our reach,” she said. “We expect action within the next few weeks.”

Preckwinkle declined to outline a Plan B if the waiver is denied or if Gov. Mitt Romney wins the November presidential election and acts to repeal the new federal health care law, as he has promised.

“I expect the President to be re-elected,” she said.

The 2013 spending plan totals just over $2.9 billion, almost exactly the same as the current budget. It features $51 million of cuts, which come largely from eliminating vacant positions in the hospital system.

Unlike the current budget, which pushed off $85 million of debt payments, there is no debt restructuring or other one-time measures. Of the $267 million shortfall, $152 million comes from the hospital system.

The Medicaid waiver would bring in $98 million. Another $25 million would come from a $1 tax on a pack of cigarettes, revenue that would go towards the public health system, officials said. A tax on gambling machines would raise $1.3 million annually, a controversial nickel-per-bullet and $25-per gun tax would raise $1 million annually, and a new so-called use tax on businesses would bring in $15 million.

“Two years ago we began to chart a new course for Cook County,” said Preckwinkle, who took the helm in 2010 after defeating incumbent Todd Stroger for the office. “We’ve solved nearly $1 billion of deficits since then, but our work is far from over.”

The county will lose $86 million of revenue this year when it embarks on the final rollback of a 1% sales tax increase implemented under Stroger’s administration. The tax hike, which pushed the county’s rate to 1.75% from 1%, generated $440 million annually.

Preckwinkle campaigned on a promise to repeal the tax increase, and since taking office has implemented a gradual. The last remaining part of the tax will be repealed Jan. 1, 2013, leaving an $86 million hole in the budget, Preckwinkle said.

“There will always be those who say this is not the time, but I remain fully committed to this action,” she said.

Cook County continues to see climbing structural costs tied to rising debt-service costs, declining health care revenue, the sales tax rollback, and rising labor costs, officials said. The county will also face higher pension payments once Illinois lawmakers enact pension reform.

“We have structural problems that demand structural solutions,” she said.

Under Preckwinkle’s spending proposal, the county’s general fund balance would total $197 million, up from $61 million when she took office.

She also announced a $5 million fund that suburban municipalities can tap as matching funds for infrastructure projects like water and sewer systems in unincorporated county areas that the municipalities would then annex.

Overall, the proposed budget is a conservative one, though the Medicaid waiver remains an uncertainty, said Lawrence Msall, director of local fiscal watchdog group the Civic Federation.

“That $100 million is key to balancing the budget, and there needs to be a back-up plan if it’s not approved or there’s a change in the administration,” Msall said. “But the budget is fairly conservative and it’s holding the line on property taxes and overall spending levels,” he said. “There are not significant gimmicks that governments like to sometimes use.”

Moody’s Investors Service rates the county’s $3.5 billion general obligation bonds Aa3. Fitch Ratings rates it AA-minus. Moody’s and Fitch both downgraded the county last year due in part to revenue declines and mounting pension and OPEB liabilities.

Standard & Poor’s rates the county AA with a stable outlook.

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