City of Chicago 2016 Budget Forum Malcolm X College Monday, August 31, 2015
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
City of Chicago Budget Facts Fiscal Year: January 1 December 31 Legal Requirements Must be approved by December 31 Must be balanced revenues 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 3
Where the Money Comes From 2015 Budgeted Revenue Airline Fees 15% Sewer & Water Fees 13% Property Taxes 10% Other Local Taxes 9% Other Non-Tax Revenue 8% Grants 17% Fines and Penalties 5% Income Taxes 5% Utility Taxes 5% Sales Taxes 8% Other Resources 5% 4
Where the Money Goes 2015 Budgeted Expenditures Police, Fire, 911 25.2% Other 0.4% 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 2.1% Community Services 6.4% Water and Sewer 6.8% Airports 8.4% Roads, Bridges, Graffiti Removal, etc. 10.4% 5
Addressing the Challenges Ahead $0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 ($100) ($94.1) ($64.5) ($200) ($300) ($220.4) ($217.7) ($297.3) ($232.6) ($400) ($420.0) ($369.0) ($338.7) ($500) ($519.7) ($600) ($700) ($635.7) ($654.7) Yearly Operating Budget Shortfall 6
($221.6) ($571.6) ($519.7) ($226.7) ($97.1) ($38.8) ($420.0) ($414.1) ($168.3) ($217.7) ($241.6) ($258.5) ($52.1) ($94.1) ($83.1) ($142.3) ($64.5) Addressing the Challenges: Reforms Before Revenue for Every Budget $0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 ($100) ($94.1) ($64.5) ($200) ($220.4) ($217.7) ($300) ($297.3) ($400) ($420.0) ($369.0) ($338.7) ($500) ($600) One-Time Resources Reform/Recurring Revenue Gap ($519.7) ($700) ($654.7) ($635.7) 7
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 8
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 City s rainy day fund Since 2012, the current administration has invested $45M in the City s rainy 9 day fund
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 Mayor s TIF surplus permanent law; building on the $300 million in TIF surplus allocated to local governments since 2012 10
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 11
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 12
Community Dialogue Share your ideas on social media using the hashtag: #ChiBudget2016 Or send us your ideas via email at: Chibudget@cityofchicago.org