City of Chicago

2016 Budget Forum

Malcolm X College
Monday, August 31, 2015

Draft - Staff policy deliberation - Not for circulation

Budget Forum Speakers

Mayor Rahm Emanuel
Juan Salgado, Moderator
Reverend Albert D. Tyson, III
City of Chicago Finance Team
Carole Brown, Chief Financial Officer
Alexandra Holt, Budget Director
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City of Chicago Budget Facts

Fiscal Year: January 1 December 31
Legal Requirements
Must be approved by December 31
Must be balancedrevenues must match spending
Size
Over $8.9 billion budget for the City of Chicago in 2015
This budget provides services including: police officers, firefighters, snow removal
operations, garbage and recycling collection, street paving, public libraries, airport
operations, water and sewer maintenance, afterschool programs

Does not include Chicago Public Schools (CPS), Chicago Park District,
Chicago Transit Authority (CTA), City Colleges, or Chicago Housing
Authority (CHA)
Combined budgets of the City of Chicago along with CPS, Chicago Park
District, CTA, City Colleges and CHA totals almost $18 billion
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Where the Money Comes From

2015 Budgeted Revenue
Sewer & Water Fees
13%

Property Taxes
10%
Other
Local Taxes
9%

Airline Fees
15%

Other Non-Tax
Revenue
8%

Sales Taxes
8%
Grants
17%
Other Resources
5%
Fines and Penalties
5%

Income Taxes
5%

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Utility Taxes
5%
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Where the Money Goes

2015 Budgeted Expenditures
Other
0.4%
Police, Fire, 911
25.2%

Debt Service for

Airports, Water and
Sewer System
10.0%
Employee Benefits
12.7%

Debt Service for

Infrastructure
9.4%
Finance and
Administration
6.8%

Permitting,
Inspections, Licensing
0.8%
Legislative
and Elections
0.6%
Economic
Development
Water and Sewer
2.1%
Draft - Staff policy6.8%
deliberation - Not for circulation
Community Services
6.4%

Airports
8.4%

Roads, Bridges, Graffiti

Removal, etc.
10.4%
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Addressing the Challenges Ahead

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

$0
($64.5)
($100)
($94.1)
($200)
($220.4)

($217.7)

($232.6)

($300)
($297.3)
($338.7)
($400)

($369.0)
($420.0)

($500)
($519.7)
($600)

($700)

($654.7)
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($635.7)

Yearly Operating Budget Shortfall

Addressing the Challenges: Reforms Before Revenue for Every Budget

($400)

2015

($258.5)

2014

($38.8)

($414.1)
($571.6)

($300)

2013
($142.3)

($83.1)

2012

($241.6)

2011

($97.1)

2010

($519.7)

($217.7)

($420.0)

($64.5)

($200)
($220.4)

2009

($226.7)

2008

($217.7)

($94.1)

2007
($64.5)

($52.1)

($100)

2006

($94.1)

$0

($168.3)

2005

($297.3)

($338.7)
($369.0)

($500)

($600)

($700)

One-Time Resources
Reform/Recurring Revenue
Gap

($221.6)

($420.0)

($519.7)

($654.7)
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($635.7)
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Addressing the Challenges: Reforms and Savings

Starting with the 2012 budget, the City has used real structural reforms
and lasting savings to close operating shortfalls each year

2012 budget: $246 million

2013 budget: $66 million
2014 budget: $84 million
2015 budget: $81 million

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Addressing the Challenges: Ending Bad Financial Practices

COMPLETED
Terminated all risky interest rate swaps to eliminate risk for taxpayers
Converted general obligation variable rate bond debt to fixed rate to reduce risk
for taxpayers
Stopped raiding reserves to fund general city operations
IN PROGRESS
End practice of using debt restructuring to pay operating expenses by 2019
Increase use of operating funds to pay for legal settlements and judgments
Invest in Citys rainy day fund
Since 2012, the current administration has invested $45M in the Citys rainy
9
day fund
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Addressing the Challenges: Reforming Tax Increment Financing (TIFs)

TIF is a funding tool used by the City to promote public and private investments
across Chicago including: roads, bridges, affordable housing, schools, parks and
economic development
Currently 147 active TIF districts citywide, down from 162 active TIF districts in
2011
More than 95% of TIF commitments under the current administration has
supported public projects, such as schools, transit, economic development
projects, and affordable housing
Recent Reforms on TIFs:
Freeze new spending in downtown TIFs and sunset them when the current and
committed projects are paid off
Making the Mayors TIF surplus permanent law; building on the $300 million in
TIF surplus allocated to local governments since 2012
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Growing Pension Payments and Legacy Debt

Despite the many savings and efficiency improvements and
structural reforms, significant financial challenges remain
both operating and legacy
Wages and benefit costs continue to grow

Pension payments and liabilities are growing

Legacy debt must be addressed

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Addressing the Challenges this Fall

$232.6 million operating shortfall in 2016; lowest since
2008
$328 million additional contribution for 2015 public
safety pension obligations
$93 million incremental increase in pension costs for all
four pension funds in 2016
$100 million debt repayments to start ending practice of
scoop and toss in 2016/restructuring debt obligations
and pushing payment off in future years at a higher
interest rate
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Community Dialogue
Share your ideas on social media using the hashtag:
#ChiBudget2016

Or send us your ideas via email at:

Chibudget@cityofchicago.org
Draft - Staff policy deliberation - Not for circulation