In spite of cuts - $1 billion financial shortfall predicted for Chicago by 2015
Mayor Emanuel says balanced budget 'will not be done in one year'
The City of Chicago must be doing something wrong. In spite of drastic cuts made to the city's operating budget, a $369 million financial shortfall is predicted for Chicago's budget in 2014 -- and predicts a shortfall of more than $1 billion by the year 2015. In releasing the budget, Chicago Mayor Rahm Emanuel remains optimistic - in spite of everything.
Are these "difficult choices" leading to the desired objective? Breitbart News reported the city's payroll is more than $2.4 billion, with over 2400 city employees making over $100,000 a year. The payroll is by far the highest expense for the city, and it's only expected to increase by $100 million in 2014.
There has been no discussion about making any cuts to employees' salaries. A 10 percent across the board cut would cover most of the city's shortfall for 2014, at least. The unfunded pension liability for city retirees appears to be a major part of this budget problem.
Emanuel is predicting revenue increases of $466 million and $580 million in 2014 and 2015 respectively, but fails to make any mention of the massive expenditures coming the city's way in 2015 and 2016.
The city's forecast report spells out that even the most positive outlook is troublesome, and the most positive possible outcome painted in the report shows a $917.8 million shortfall by 2016.
The pension problem does not lie squarely on Chicago's shoulders, as stated in the report: "the City's pension funds are governed by state law." The state legislature has yet to act, despite a veto-proof Democrat majority as well as a Democrat Governor in Pat Quinn.
From the report: "Even under optimistic projections, the City will continue to experience a sizable annual operating budget shortfall for several years. This is in part a product of the City's longstanding structural deficit and makes evident the need to continue the difficult process of reforming government to bring operating costs in line with revenues in 2014 and beyond.
"However, the legacy cost of pension obligations more than doubles the size of the City's projected gap in 2015 and 2016. Substantive pension reform could significantly reduce the impact of these costs on the City's budget over the coming years; however, such action must occur at the State level, as the City's pension funds are governed by state law."
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