07/13/2009 05:12 am ET Updated May 25, 2011

Broke Chicago: As Budget Hole Nears $300 Million City Could Lay Off 1,500 Workers, Tap Parking Meter Money

Chicago is facing a budget deficit close to $300 million and city officials say they will need to lay off nearly 1,500 city workers unless union officials agree to contract reductions. But the threatened cuts won't come close to plugging the growing budget shortfall, as Greg Hinz notes on his Crain's blog:

But the real news is that those 1,500 layoffs will fill only about 10% of a hole in the city budget that's now approaching a stunning $300 million. So, where's the city going to get that kind of cash?

Hinz says the city will draw on its $320 million reserve fund created from the parking meter lease deal, but is "unlikely" to tap too much.

The AP has more details on the threatened layoffs:

CHICAGO (AP) -- Chicago officials say they must resort to laying off 1,500 workers because union leaders haven't agreed to proposed cost-saving measures.

According to a news release Friday, the city has begun sending out 1,504 layoff notices to city employees.

City officials say they're still open to negotiations.

The city has proposed that union workers agree to unpaid furlough days and that compensatory time be taken for overtime instead of cash. Labor leaders boycotted a scheduled meeting with Mayor Richard Daley earlier this week.

The layoffs would become effective July 15 and save $34 million this year.

Phone messages left for labor officials were not immediately returned Friday. Union leaders have said they wanted a two-year, no-layoff guarantee in exchange for accepting the furlough plan.