09/15/2008 05:12 am ET Updated May 25, 2011

City Debt $420 Million

Chicago is facing a $420 million budget hole, city budget officials announced Thursday. They project a $141 million shortfall this year that will balloon to $420 million by 2009.

The culprit? The Reader's Mick Dumke credits the flagging real estate market, among other causes:

The real estate transfer tax will pull in $51 million less this year than it did in 2007. People are also spending less on gas, cigarettes, and bottled water, so tax monies on those items aren't coming in as expected.

And of course city spending is way up--by $28 million over what was budgeted, mostly on snow removal and extra police--despite $20 million in cuts made earlier this year.

The announcement confirmed a Wednesday Sun-Times report that the expected deficit would force Mayor Daley to lay off nearly 1,000 city employees.

The city kept mum on any potential layoffs. Chicago's Chief Financial Officer Paul Volpe said only that "everything is on the table," save for a property tax increase, according to the Sun-Times:

"We're not gonna speculate on the number of layoffs or if they are even necessary. Today, we're simply framing the issue for you," Volpe told a City Hall news conference.

However, The Tribune reports that Ald. George Cardenas (12th) said he expects the city will fire nearly 1,800 employees.