Chicago fiscal 2014 budget passes council mostly intact
CHICAGO Nov 26 (Reuters) - Chicago Mayor Rahm Emanuel's $7 billion fiscal 2014 budget sailed through the city council on Tuesday relatively unchanged from the spending plan he proposed in October.
"It's a budget that follows the strategy of cutting where we need to and investing where we must," Emanuel said following the 45-5 vote that featured two more "no" votes than the 46-3 vote for his fiscal 2013 budget.
The budget, which includes nearly $3.3 billion for operational expenses, avoids raising property, sales or gasoline taxes for the third consecutive year, the mayor said.
He added that the budget for the fiscal year that begins Jan. 1 also reduces Chicago's nagging structural deficit, without "smoke and mirrors."
But the plan for balancing the upcoming budget includes some one-time measures, such as tapping excess revenue from various accounts and development districts. The city also plans to restructure about $150 million of outstanding bonds to free up money, a spokeswoman for the budget department said.
Some aldermen who opposed the mayor's proposed cigarette tax hike were able to negotiate an alternative: increasing the tax by 50 cents instead of the mayor's suggested 75 cents while also raising the fine for parking in front of fire hydrants, according to the spokeswoman.
There was opposition to the mayor's plan to rely on police overtime instead of adding substantially to the force to fight crime, which led at least one alderman to vote "no" on the budget.
A government finance watchdog group earlier this month called the budget "a reasonable short-term plan," that cuts the city's $338.7 million structural deficit by about two thirds.
But the Chicago-based Civic Federation warned that the city will face a $590 million jump in state-mandated pension payments in the next budget that will require a huge increase in property taxes or severe service reductions.
Chicago has been unable to win pension concessions from its major unions or pension reforms from the Illinois Legislature.
The looming pension funding cliff contributed to the second three-notch downgrade of Chicago's general obligation debt rating since Moody's Investors Service dropped the rating to A3 in July. Fitch Ratings on Nov. 8 cut Chicago's rating to A-minus with a negative outlook from AA-minus.
"The city has been unsuccessful in its attempts to negotiate a solution with labor unions and lobby the state legislature, which ultimately controls the benefit formula," Fitch said in a statement.
A report this month by a Morningstar municipal credit analyst found Chicago's funded ratio for pensions, at 35.2 percent, was the lowest among the 25 biggest U.S. cities.
- Exclusive: Radar data suggests missing Malaysia plane deliberately flown way off course - sources
- Investigators focus on foul play behind missing Malaysia plane: sources |
- Kremlin website hit by 'powerful' cyber attack
- West prepares sanctions as Russia presses on with Crimea takeover |
- UPDATE 1-Rolls-Royce concurs with Malaysia on missing jet's engine data