Budget squeeze calls for cuts, Daley says

A reduction in overtime for emergency workers and possible cuts in city services are among the austerity measures Mayor Richard M. Daley announced today as part of an across-the-board belt-tightening that will shave $20 million off the city budget.

The ripple effects of a soft housing market, rising gasoline prices, declining revenues from city taxes and an unexpectedly harsh winter are to blame for the cuts, said Daley.

"We're in some pretty unique and challenging times in terms of the economy," said Daley. "That's why today, to protect our taxpayers, we're announcing major steps to cut spending and even better manage government. We're not alone. Every city and state is forced to take these same steps to responsibly manage their budgets."

The squeeze comes a few months after the city approved $280 million in increased taxes, fees and fines, including a steep increase in property taxes, to fund the 2008 $5.9 billion budget.

The menu of cuts includes:

*A city-wide hiring freeze on all positions not vital to public safety or revenue. ($11 million)

*A three-percent reduction of all non-personnel costs, including in police, fire, and the Office of Emergency Management and Communications. ($5 million)

*Reductions in overtime pay, including for police, fire and OEMC. ($2 million)

*Renegotiation of vendor contracts. (up to $2.5 million)

*Eliminating out-of-town travel, excluding senior city officials on "official city business." ($250,000)

*Encouraging city hall managers to take unpaid leave. ($250,000)

The mayor said that city residents should prepare themselves for a shrinkage in city services, but said he couldn't say specifically what services might be affected.

"I want to be clear," said Daley. "Because we've substantially reduced spending over the years, we're at that point where people may begin to feel an impact in some service delivery. We'll work to minimize it, but, there is no alternative."

Chicago's financial squeeze reflects the gloom in the national economy, said Daley.

Chicago metro-area home sales slid 34 percent from January 2007 to January 2008, while median home sale prices fell 2.2% in the same period, the mayor noted. Foreclosures in the city increased by 50 percent last year.

Financial fallout from the weak real estate market is expected to depress city land sales and building permit revenue, said the mayor.

In addition, city revenue has fluctuated, said Daley. While hotel and amusement taxes exceeded expectations, the real estate transfer tax and the cigarette tax fell short of 2007 year-end projections.

Meanwhile, the city so far has spent approximately $5 million more than the $18.5 million it budgeted for snow removal.

Daley pointed to continuing efforts by his administration to lease parking meters, Midway International Airport and the city's three waste and recycling facilities as measures that would strengthen the city's financial position.

He also called for action in Springfield on a capital spending bill to fund infrastructure in the state and drew a bleak portrait of his economic expectations.

At one point the Daley made reference to Franklin D. Roosevelt's efforts to pull the country out of the Great Depression.

"We need a huge infrastructure bill in the country," he said.