Chicago City Council approves $8.3 bln FY 2013 budget
* City's pension payments to absorb 22 pct of budget in 4 yrs
* Reform never ends -mayor
* Watchdog warns on use of nonrecurring revenue
CHICAGO, Nov 15 (Reuters) - Chicago Mayor Rahm Emanuel's $8.3 billion all-funds fiscal 2013 budget that includes no tax or fee hikes breezed through the city council on Thursday in a 46-3 vote.
Emanuel said the budget, his second since taking office, was built on tough decisions and he warned that changes will be ongoing to deal with the city's financial situation, which eroded in the wake of the economic recession like most other U.S. cities.
"Reform never ends," he told aldermen after the vote.
There was minimal grumbling among city council members regarding police staffing levels and privatization initiatives in the spending plan for the fiscal year that begins Jan. 1. But some expressed concern for future budgets in the absence of state approval of public pension reforms.
In his budget address last month, the mayor warned aldermen that the city's pension payment will consume 22 percent or $1 of every $5 in the budget in less than four years.
Chicago's four pension funds face a collective $19.2 billion unfunded liability at the end of fiscal 2012, according to a city website. Emanuel earlier this year proposed suspending cost-of-living increases for retirees, phasing in higher worker pension contributions and increasing the retirement age.
However, the Illinois General Assembly has so far not been able to push out legislation that would ease the escalating costs of state and local pensions. The legislature is expected to try again during a lame-duck session in January.
Chicago's newly approved budget relies on revenue growth, spending cuts and some nonrecurring revenue to eliminate a $298 million gap, the city's smallest since the 2007-09 recession.
A recent analysis of the budget by the Civic Federation, a Chicago-based government finance watchdog group, said the spending plan continues to restructure city government and reduces the use of one-time revenue measures to tackle the deficit. However, the group noted that at least $47 million of the budget gap will be closed through refinancing outstanding debt and tapping tax increment financing money.
"The city places itself in a vulnerable position by depending on significant amounts of revenue that by definition will not be available for next year's budget," the group said when it released its analysis on Oct. 31.
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