04/28/2010 05:12 am ET | Updated May 25, 2011

Chicago Public Schools Face Hundreds Of Layoffs, Furloughs As Deficit Nears $975 Million

While the state's massive budget problem is not news to anyone at this point, the solution to this problem may come at more of a cost than Illinoisans had expected. With state leaders nervous about raising income taxes, officials have suggested $2 billion in budget cuts could be the only way to go--and public schools are going to suffer.

Earlier this week, Gov. Pat Quinn said that schools may have to be cut by $1 billion statewide--which was bad news for the already struggling Chicago Public School system.

On Thursday, CPS officials announced 500 job cuts, which will mostly affect non-teaching positions, and three weeks of furloughs for non-union workers. The cuts come as school officials expect a $975 million deficit for the next school year, the Chicago Sun-Times reports.

With no help from Springfield, the school district run by CEO Ron Huberman is in an "incredibly serious" financial situation. The Sun-Times reports:

With no new funding from Springfield, CPS officials projected a $700 million deficit next year. That gap could balloon to $975 million if Gov. Quinn wins a proposed 15 percent cut in state education funding, they said.

CPS is hoping concessions by teachers unions could help the situation, but the unions aren't willing to budge in many areas:

"We will not agree to any proposal that either destroys our contract or fails to maintain the integrity of our pension system," CTU President Marilyn Stewart told the Sun-Times. " Nor will we tolerate implied threats by Mr. Huberman that he may have to cut programs and services for our students or lay off teachers."

Meanwhile, Gov. Quinn is trying to avoid the massive cuts by implementing an income tax hike in the state--while fearing the political backlash that could come with a hike.

"Frankly, I think last year there was an air of unreality on (the) part of some of the legislature who didn't realize how dire the circumstances were," Quinn told the Chicago Tribune.

The Chicago News Cooperative reports that Illinois has the lowest income tax rate of the 41 states that tax wage income, making the proposed hike appealing during a budget fight.:

But higher taxes also affect how employers view the state's business climate, a calculation that factors in state and local taxes on retail sales and business income, too.

Meanwhile, Quinn is asking the public for help with the budget problems and is set to address lawmakers on March 10.