* Emanuel's second budget since becoming mayor
* Cites looming $1.2 bln pension problem
* Revenue growth, other measures to close gap
CHICAGO, Oct 10 Chicago Mayor Rahm Emanuel
unveiled an $8.35 billion all-funds budget on Wednesday that
eschews tax hikes but continues to squeeze savings and revenue
from various operations to tackle a $298 million structural
Emanuel's second budget since becoming mayor aims to close
the deficit further as public pension problems threaten to
impair the city's ability to provide core services within its
current tax structure.
"This budget is both a dividend of the work we have done and
a down payment on the hard work to come," the mayor said in his
address to the city council.
The projected fiscal 2013 deficit was whittled down to $298
million from $369 million in July as revenue collections, which
have sagged in the wake of the economic recession, perked up and
various cost-saving measures took hold, the city announced last
month. Heading into fiscal 2012, the budget gap was much higher
at $635.7 million.
The mayor warned aldermen that the city's pension payment
will consume 22 percent or one of every $5 in the budget in less
than four years.
"That's $1.2 billion of taxpayer money, and growing, each
year after that," he said, calling on Illinois lawmakers to pass
In a speech before municipal analysts in New York City on
Friday, Emanuel said he was hopeful the state legislature would
take up reform measures in January.
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.
Alderman Edward Burke, who heads the council's powerful
finance committee, said raising revenue for pensions will not
"Government can't tax its way out of this pension mess," he
The pension problem led Moody's Investors Service in April
to revise the outlook on Chicago's Aa3 credit rating to negative
The mayor's proposed fiscal 2013 budget includes operational
spending of $3.157 billion, up from an estimated $3.14 billion
in the current fiscal year, which ends Dec. 31. Emanuel's new
spending plan also counts an estimated $1.81 billion in federal,
state and other grant funds.
It also projects $42 million in additional revenue growth, a
$40 million savings from a long-term debt refinancing, as well
as $67 million saved through cuts, including layoffs and
attrition, and reforms.
Laurence Msall, president of the Civic Federation, a
Chicago-based government finance watchdog group, said the budget
does include one-time revenue measures such as the debt
refunding and the tapping of tax increment financing money.
"The mayor's proposal appears to be a reasonable plan to
reduce the structural deficit, but will not eliminate it," he
Alderman Carrie Austin, who chairs the council's budget
committee, said she will do her "level best" to get the spending
"I know there are some parts in there where every council
member might not be amenable to," she said, adding that she will
work with those aldermen.