Chicago Mayor Rahm Emanuel said Friday that the city’s facing a $635 million budget shortfall next fiscal year.

Emanuel told reporters the budget deficit isn’t anything new. He didn’t directly criticize former Mayor Richard Daley, but Emanuel said the issue is long-term and structural.

“That means you got a problem that you have not addressed,” Emanuel said.

Emanuel said he doesn’t plan to raise taxes, cut police officers or dip into the city’s savings to fund basic city operations.

“The capital I’ll spend will be political capital to make the tough choices that we have to do for the city,” Emanuel said. “The capital I won’t spend is the taxpayers’ dollars asking them to put more into a system that hasn’t been reformed. This system needs reform. It is calling out for it.”

Emanuel said he will keep some middle management positions frozen and make some city services compete with the private sector to see which one can do the job for a cheaper price.