Cook County Government Braces For Big Budget Gap Due To COVID-19

Preliminary projections show the county expects to have a shortfall of up to $275 million this budget year.

Cook County Zoom Meeting
The Cook County Board of Commissioners had its first full board meeting on April 23 in about two months amid the COVID-19 pandemic. The 17-member board, led by President Toni Preckwinkle (top, right) met virtually. Kristen Schorsch / WBEZ
Cook County Zoom Meeting
The Cook County Board of Commissioners had its first full board meeting on April 23 in about two months amid the COVID-19 pandemic. The 17-member board, led by President Toni Preckwinkle (top, right) met virtually. Kristen Schorsch / WBEZ

Cook County Government Braces For Big Budget Gap Due To COVID-19

Preliminary projections show the county expects to have a shortfall of up to $275 million this budget year.

Preliminary projections show Cook County expects to have a shortfall of up to $275 million this budget year, a ripple effect of the COVID-19 pandemic.

The biggest loss in revenue is in sales tax — the largest moneymaker for the county, Chief Financial Officer Ammar Rizki told WBEZ. A dip in hotel and amusement tax dollars isn’t far behind, he said.

On Friday, a day after WBEZ originally reported the county expected at least a $200 million budget shortfall, Rizki expanded on the financial picture in a conference call with other media. He said the shortfall is likely up to $275 million.

That includes numbers from the county-run health system, which makes up nearly half of the government’s $6.2 billion budget, and which will likely be short an estimated $60 million to $75 million in revenue. The county’s two public hospitals, like others across the state, stopped money-making elective surgeries to free up beds and staff for an expected surge in coronavirus patients. Rizki said the hospitals also likely lost business to people who were told to steer clear of emergency departments battling COVID-19, unless it was a true emergency.

The county also temporarily stopped collecting some taxes to give residents and business owners a break, as a record number of people have lost their jobs.

“Every local government is in trouble,” said Cook County Commissioner Larry Suffredin, an Evanston Democrat. “The fundamental taxes we rely on, they’re all depressed, and they’re not going to recover.”

The COVID-19 pandemic has flipped the economy on its head nationwide. To slow the spread of the virus in Illinois, Gov. JB Pritzker issued a statewide stay-at-home order that will now extend through May, the governor announced Thursday. Restaurants and bars are closed except for carry-out. Sports teams canceled their seasons. Schools-age kids are learning at home, and hundreds of thousands of people in Illinois have filed for unemployment.

Cook County finances are sensitive to the economy, Rizki says, since about two-thirds of its revenue comes from taxes that people pay when they go out to eat, stay in fancy downtown hotels, or attend music festivals.

But all of those activities have essentially stopped during the pandemic.

“The longer the delay stays around reopening the economy, that is going to have an impact” on Cook County’s finances, Rizki said. “Even when it’s lifted, there will still be reluctance for people to go back to their old habits. … Trying to predict that and model that, as you can expect, is a monumental task.”

People used to staying six feet apart and ordering groceries online delivered to their doorstep, might not want to quickly return to restaurants and packed concerts. And with Pritzker’s announcement Thursday that the state is projecting cases to peak some time in the next couple of weeks, the governor warned that he’s hesitant to reopen the state’s economy too quickly, or the virus could spread even more.

Rizki cautions that the county’s projected revenue gap for the fiscal year, which ends Nov. 30, is very preliminary. For example, it does not factor in how many people might not be able to afford their property tax bills, which are due to the county this summer.

And there are a lot of unknowns, such as how much money federal officials might provide governments — including Cook County’s — to cover financial losses connected to the pandemic. The county has received nearly $430 million from the CARES Act, the new federal stimulus package, to cover expenses related to COVID-19, Rizki said. The county expects to use about $100 million of it this year, but hopes — like other governments around the nation — to use more of the relief funds for other expenses, such as Cook County’s estimated shortfall. Rizki called it the “moonshot goal.”

There are other bright spots: The county’s expenses are estimated to decline a bit, around less than $10 million this year. That includes savings on office supplies and utility bills because many government offices are closed.

And Pritzker Thursday said he’ll likely allow elective surgeries to resume May 1 statewide. There could be additional federal dollars that can help the health system, too, Rizki said.

So, some money will start to trickle in. Cook County also has a rainy day fund of about $300 million, but Rizki said he doesn’t want to tap all of the reserves. Cook County Board President Toni Preckwinkle on Friday was cautious, too: “It’s not just a challenge for this year in terms of how we use our reserves, but what we’re going to do in the next couple of years in particular” as the county — and its residents — struggle with the economic fallout of COVID-19.

It’s not clear how the county’s deficit could grow as the economic slump drags on — or whether it may get smaller with federal aid.

But for now, “we have to go back and take a hard look at what are the things we could do without,” Rizki said.

In the past, the county has laid off workers — there are roughly 22,000 — and reduced services to make ends meet.

“If we don’t get lost revenue, we’re really in a tough spot,” Preckwinkle said Thursday.

Kristen Schorsch covers public health on WBEZ’s government and politics team. Follow her @kschorsch.