Oct. 11 (Bloomberg) -- Chicago Mayor Rahm Emanuel said his proposed budget for next year is a “clear break with the past” and is based on “very, very conservative” revenue projections.
The 52-year-old Democrat, who presented his $8.3 billion spending plan to the City Council yesterday, said revenue growth of 1 percent to 3 percent in the nation’s third-most-populous city is driven partly by higher-than-expected hotel tax receipts and increased property sales.
“These measurements are not wild-eyed,” Emanuel told reporters today during a breakfast meeting at Bloomberg's Chicago bureau.
Emanuel’s second spending plan since taking office in May 2011 would eliminate a projected deficit of $298 million without raising fees or taxes. While budget officials said they expect a surplus of $30 million to $40 million at the end of next year, ballooning pension costs may force the city to make deep cuts in government services.
Pension costs will consume 22 percent of the budget -- about $1.2 billion -- within four years if the state Legislature doesn’t restructure the retirement systems, including adjustments in benefits and contributions, the mayor has said.
Workers now have no guarantee of the financial stability of their retirement funds, Emanuel said, because the city doesn’t have the means to pay for past promises without more than doubling property taxes or making large cuts in essential services.
“Right now they’re contributing to a system that won’t pay out -- I think there’s nothing more dishonest than that,” he said. “Let’s get them certainty.”
Illinois lawmakers are expected to address the pension shortfall in early January as part of a package of changes to address underfunded state retirement funds. Current retirees haven’t been affected.
Illinois has the nation’s weakest pension-funding ratio, according to data compiled by Bloomberg. The state, which has an unfunded retirement gap of $83 billion, had its credit-rating cut in January by Moody’s Investors Service, which cited “severe pension under-funding.”
Emanuel criticized a lack of leadership in Springfield, the state capital, on the pension matter, saying, “They need to get in gear.”
His budget proposed funding for 457 new police officers, as the city deals with a 28 percent jump in homicides through the first nine months of the year. The mayor described reporters’ attention to the rise in murders as “journalism through a rearview mirror,” and said the city is making progress at cutting that rate as well as the incidence of overall crime.
Chicago Police reported 406 homicides as of Sept. 30, up from 317 during the same period in 2011, according to department records. The rate has dropped since March, when the murder rate was up 66 percent, the mayor said.
Of the overall rate, he said: “We are without a doubt bringing our crime down.”
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