November 2, 2011
The Civic Federation supports the proposed FY2012 City of Chicago budget of nearly $6.3 billion because it takes effective action to reduce the City’s structural deficit through significant expenditure reductions and targeted revenue increases. The proposed budget greatly reduces the City’s reliance on one-time revenue sources to close the $635.7 million budget gap. It prudently does not contain general tax increases, but rather focuses primarily on reducing the cost of the City’s operations and reforming the way in which government services are delivered.
The City will continue to face significant challenges with an ongoing—although much smaller—structural deficit, enormous unfunded pension liabilities and growing bonded indebtedness. Repeated use of non-recurring revenue sources in the past, especially the use of over $1.3 billion of principal from the proceeds from the Skyway and parking meter long-term asset leases, has exacerbated the City’s financial crisis and led to a persistent structural deficit in the annual operating budget. While the FY2012 budget makes great strides in reducing the structural deficit, the proposed budget continues to use some non-recurring revenues to close its budget shortfall and does not address long-term debt and pension issues.