Gov. Jim Edgar`s proposed budget could blow an immediate $25.3 million hole into Mayor Richard Daley`s operating budget, forcing as many as 1,700 layoffs from the city workforce, the Chicago budget director said Tuesday.
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Budget Director Karen Danczak Lyons said that the city had based its 1992 budget, which operates on the calendar year, on a promise by Edgar made last year that the city would receive a cut of the state income tax surcharge.
But Edgar`s announcement Tuesday that he wants to keep all of the income tax surcharge money after July 1 would deprive the city of $25.3 million it had counted on in the second half of this year to fund city government operations.
During the entire state fiscal year, which begins July 1, Chicago could lose $58 million, state officials said.
Besides the Daley administration, Edgar`s proposal also dismayed north suburban officials from Evanston to Round Lake, who said it would mean reduced services, higher property taxes or both. Many of them said they would lobby state legislators to preserve their share of the money.
Edgar`s surcharge proposal was among other austerity measures proposed in his 1993 budget message Tuesday. The budget also would cut welfare benefits, impose fees for state parks, boost taxes on some alcohol and tobacco products and cut state employment in an effort to control spending.
If Edgar manages to carry out his plan, Danczak Lyons said, the city might have to lay off 1,700 of its approximately 39,000 city workers as of July 1 to account for the unexpected midyear budget deficit.
Already this year, she said, the city has laid off about 800 employees to meet the city`s financial crunch.
An additional layoff of 1,700 employees would force the city to resort to ”programmatic” cuts, eliminating entire services from the city government rather than just trim back the manpower in various departments.
Last year, she said, Daley had to make big cuts in his city budget, including layoffs and cutbacks in services, because the state cut its share of the income tax surcharge in half.
Although that cut of the surcharge revenues was expected to return to about 75 percent of its earlier funding by July 1, under a deal made in the final days of the legislative session last summer, Edgar`s decision to cancel the two-year deal will force the city to scramble to make ends meet this year. She said the city had made advance estimates that a restored income tax surcharge share would have provided as much as $60 million in the city`s 1993 budget, to be unveiled in October. But at the moment, she said, the city had to wrestle with its immediate problem of coming up short by more than $25 million in this year`s operating budget.
The city still faces another big revenue problem this year because the labor contracts with all of the city`s unionized work force have expired and negotiations are continuing.
Faced now with a possible $25.3 million hole in an already lean city budget, Daley will be forced to go to the union leadership and make his case that there is no money to give them.
”We`re looking at massive service reductions or a property tax increase, neither of which is desirable,” said Larry Arft, village manager of Morton Grove. More likely, he suggested, is a combination of the two.
”We`d lose better than $700,000,” he said, noting that his staff had just prepared the village`s new $10 million budget on the ”good faith assumption” that the state surcharge money would be forthcoming.
Arft and other local officials also expressed anger about the timing of the proposal, because most communities have just begun a new fiscal year or are about to.
”Our budget is done,” Arft said, calling the governor`s proposal a
”bombshell.”
Evanston Mayor Joan Barr, whose city would lose a little more than $1 million, echoed the frustration of several municipal officials.
”I don`t know where we`re supposed to turn to,” she said.
Unlike the federal and state governments, which can pass burdens along to lower levels of government, Barr said, ”We can`t go any further because we`re the ones who walk down the streets with the taxpayers.”
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Some Lake County communities can`t go any further by law. That is because of the state-imposed cap on property tax collections in the collar counties, which limits increases to 5 percent or the rate of inflation.
Some officials said they would fight the governor`s proposal in the legislature. ”You betcha, we`re going to fight this,” said Sonya Crawshaw, president of the Northwest Municipal Conference, whose 35 member communities are in the north and northwest suburbs.