CITY OF CHICAGO BUDGET GAP WILL GROW – Are City Employee Layoffs Far Behind?

CITY OF CHICAGO BUDGET GAP WILL GROW – Are City Employee Layoffs Far Behind?

ESTIMATES CALL FOR 1800 LAYOFFS – CHICAGO ALDERMAN GEORGE CARDENAS 12TH WARD)!

Preliminary estimates from the Chicago Mayor Richard Daley’s office peg the projected shortfall in the 2009 City Budget at $420 Million. State of Illinois Law requires a balanced budget for all municipalities across the state so just how the City of Chicago will plug that gap is a matter of speculation.

Many figure that the shortage can be reduced in two main ways.

First a bloated city payroll can be trimmed with as many as 1800 working in city government losing their jobs. Even this radical move according to Alderman Cardenas as well as the Chicago Chief Financial Officer Paul Volpe will cover only about $170 Million of the shortfall.

The rest could come from to-be-determined new taxes although Volpe said Mayor Daley will not raise already skyrocketing city property taxes for the second straight year.

In Chicago the budget deficit for 2008 is projected at $141 Million. Because of the sluggish economy it could rise to almost $300 Million in 2009.

Some culprits for the shortfall?

Chicago Real Estate Transfer Tax revenue generated $244 Million in 2005 near the peak of the real estate boom market across the city. So far in 2008 transfer tax revenues have dropped to $155 Million despite the fact the city imposed a new $3/M of purchase price transfer tax increase paid by home sellers last spring.

Transfer Tax Revenue for the city was expected to fall in the $215 Million range by this time but the continued sluggish housing market here has kept this revenue source down. Due to continued anticipated housing market weakness here in 2009 Volpe has reduced his revenue estimate for the transfer tax to only $150 Million next year.

For more info read the Clout Street Blog and the posting by Dan Mihalopoulos in today’s Chicago Tribune.

DEAN MOSS & DEAN’S TEAM CHICAGO