Chicago aldermen struck an optimistic note about Mayor Rahm Emanuel’s spending blueprint during the first of several budget hearings Tuesday, while warning the 2013 budget process could be the “calm before the storm” as the city still doesn’t have a way to deal with billions in unfunded retirement payouts.
Aldermen heaped praise upon the mayor’s budget and finance officers, saying a lot of the heavy fiscal lifting was done last year, when Emanuel proposed closing a $636 million deficit through a mix of higher taxes, fines and fees.
“I think this is one of the best budgets that have faced us in a number of years,” said ninth ward Ald. Anthony Beale.
Emanuel’s administration is hoping savings on health care and personnel, and increased debt collection will help close a projected $298 million budget gap for 2013. The mayor is also betting the improving economy will boost tax revenues, as Chicago tourism increases and home sales pickup with an upswing in the housing market.
“While we cannot expect growth to continue at this pace forever, economic indicators point towards growth in 2013,” said Budget Director Alex Holt. “Businesses are expanding in and moving to Chicago, and the city’s unemployment rate is steadily decreasing.”
Administration officials acknowledged the “aggressive” $20 million savings estimate in the city’s employee health-care system. The savings comes from a new focus on preventative medicine as part of a so-called “wellness program” meant to reduce costly medical care down the road, said Comptroller Amer Ahmad.
But Ald. Scott Waguespack (32nd) questioned the motives of the private company running the program, based on his own recent health screening.
“They told me that I needed coaching because I was overweight,” said Waguespack, who later clarified he is 5’10” tall and weighs about 160 pounds. “We’ll have to watch that [contract] over the next couple of years,” Waguespack said. “Especially if I have to lose more weight.”
The city’s also hoping to bring in $24 million by cracking down on people and businesses who owe the city money. And it’s banking on another $20 to $30 million from new speed cameras that photograph and automatically ticket speeders near schools and parks, similar to the red light cameras already at some intersections.
But it’s still unclear how the city can cope with a worker pension system that’s underfunded by an estimated $17 billion, according to 2011 figures.
That prompted Chief Financial Officer Lois Scott to label the pension situation “very dire,” warning of a “pension cliff” that would see the city’s pension costs jump by about $700 million for 2016, absent any pension reform in Springfield.
The mayor used his budget speech last week present a doomsday scenario of drastic tax hikes or service cuts if state lawmakers don’t make changes to municipal pension law, which governs how much Chicago must pay into city workers’ retirement accounts.
“I feel like this is the calm before the storm, and that the storm is gonna be very rocky,” Ald. Pat Dowell (3rd) said of this year’s budget.
The City Council has until the end of the year to approve a budget for 2013.