UPDATE:
Chicago's budget director told aldermen that the city will face a $655 million budget shortfall in the coming year, according to a new Sun-Times article published Friday.
Eugene Munin informed the City Council of the grim news in closed-door sessions, and suggested that the situation could be even worse than expected thanks to a Supreme Court ruling that cited discrimination against black applicants to the Chicago Fire Department. That ruling could require the CFD to hire 120 black firemen, and pay claims to nearly 6,000 more.
In the article, Ald. Pat O'Connor (40th) suggested the dissolution of tax-increment financing districts to help solve the city's budget crisis, describing the $1.2 billion in funds held in TIFs as "under-utilized and not designated for specific projects.”
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The city of Chicago, like so many other local governments across the country, is facing a serious budget shortfall. And to make matters worse, it doesn't have a whole lot in the bank.
In fact, while a slush fund created by tax dollars and controlled by the mayor is sitting on a bountiful $1.2 billion, the city itself ended 2009 with only $2.3 million in the bank, according to a report in the Chicago Sun-Times.
Astonishingly, as the Sun-Times points out, that was a marked improvement over 2008, when the city ended the year with only $200,000 in the bank. That's hardly a drop in the bucket compared with the city's overall annual budget of $6.1 billion.
A wealth of city data (about the only wealth to be found) came to light as the accounting firm Deloitte & Touche finished its year-end audit of Chicago. Some of it was financial -- $16.9 billion in long-term debt, a 14 percent drop in concessions revenue at O'Hare -- but the audit also tracked basic municipal data.
The Sun-Times describes a few examples:
The number of "physical arrests" by Chicago Police continued their steady decline -- from 227,576 in 2006 and 196,621 in 2008 to 181,254 last year.
The downward trend coincides with a hiring slowdown that has left the Police Department more than 2,000 officers-a-day below authorized strength. It also coincides with allegations of "de-policing," a condition that exists when police officers "stop doing their jobs" because they're afraid nobody has their back.
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The audits also show that daily refuse collections have also dropped -- from 4,451 tons in 2006 to 3,974 and 4,240 in 2008 to 3,974 in 2009.
But perhaps the most stunning figure came near the end of the paper's story. While the city grapples with chilling budget deficits, borrowing billions and looting the 75-year parking meter windfall for cash, one enormous sum of tax revenues is tucked away in discretionary funds controlled by the mayor.
Tax-increment financing districts, or TIFs, are areas where the property tax payments are frozen for up to 24 years. If property values increase, the money that property owners would have paid in higher taxes is instead siphoned off by the TIF, and held in a fund controlled by the Mayor's office.
Mayor Daley has described TIFs as his favored tool for economic development. But what Mick Dumke and Ben Joravsky at the Chicago Reader called the city's "shadow budget" is currently holding $1.2 billion in money that would otherwise be city revenue.
That money could have helped hire more police, or staved off some of the massive layoffs at the Chicago Public Schools. It could have helped prevent the city from borrowing as much as it has -- nearly $6,000 per resident of Chicago -- or from dipping into a parking-meter fund that was meant to last 75 years and is now (not two years in) nearly empty.
Instead, it remains squirreled away for Daley-approved development projects, of which by far the most take place in downtown wards. Few wards in the South Side see significant TIF dollars.
Meanwhile, the city's actual bank account remains perilously low. The Sun-Times quotes Civic Federation President Laurence Msall as saying that a city the size of Chicago should have $200 million in cash reserves at minimum.
That's almost 75 times the amount it had at the end of 2009.