$297 Million Budget Gap for 2015 is Lowest Since 2008
Mayor Emanuel today released a preliminary estimate of $297 million for the City’s 2015 budget gap, less than half of what it was projected to be three years ago, and $100 million smaller than it was projected to be at this time last year. This projected gap is much smaller than those seen during the recession, and the lowest since 2008.
The City’s 2015-2017 financial outlook shows the progress that has been made towards bringing operating expenses in line with revenues, reforming service delivery while reducing costs, and by reforming two of the City’s four pension funds.
“By making the tough but necessary choices over the past three years, we are able to continue chipping away and have cut our budget gap in half,” Mayor Emanuel Said. “While a $297 million budget shortfall is substantial, we are making progress in righting the City’s financial ship.”
The significant reduction of the City’s structural deficit is the result of real and lasting changes made as part of the previous three budgets and facilitated with Budget Chairman Carrie Austin and others in the City Council. These include, among others, the review and renegotiation of major contractual costs, reforms that have decreased the City’s healthcare costs, the introduction of managed competitions for City services, and the transition to grid-based garbage collection.
In 2014, the City worked with unions and state lawmakers to pass important reforms to the Municipal and Laborer’s pension funds that adjust benefits and increase payments in a manner that protects Chicago’s taxpayers and also the retirement security of City employees.
The projected 2015 $297 million budget gap is the result of revenues projected at $3.22 billion and expenses projected at $3.52 billion. Revenue estimates reflect continued economic growth and a return to normal trends in revenues impacted by the severe weather in 2014. Expenses are up from 2014 due largely to increased salaries and wages under collective bargaining agreements.
The 2015 budget gap was announced as part of the Office of Budget and Management’s (OBM) Annual Financial Analysis (AFA) that was released today. The AFA, initiated after Mayor Emanuel signed an Executive Order creating a long-term budget and planning process in 2011, sheds light on the disparity between revenues and expenditures the City has experienced over the past decade and provides the budget forecast for three subsequent years into the future.
Mayor Emanuel will present his 2015 budget proposal to the City Council in October. The complete AFA can be obtained on http://www.cityofchicago.org/city/en/depts/obm.html.