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While the report
projects that fiscal 2016 expenditures will outstrip revenue by
$232.6 million, the lowest gap since 2008, additional pension
and debt payments would push the deficit to $425.6 million.
If Illinois fails to enact legislation easing Chicago's payments
to its public safety retirement systems, the deficit could be
even higher.
"We have made significant progress, while continuing to make
investments important to Chicago's families and neighborhoods,
but this progress is threatened by the massive pension
liabilities that must be addressed this year," Mayor Rahm
Emanuel said in a statement.
The analysis indicated that budget gaps would continue through
fiscal 2018, when the deficit could range from $132.4 million to
$801 million.
Chronic structural budget deficits and a $20 billion unfunded
pension liability have led to a slew of credit rating
downgrades, including one by Moody's Investors Service in May
that dropped Chicago into the "junk" category. As a result, the
third-largest U.S. city has had to offer hefty yields to sell
its debt in the municipal bond market.
Emanuel has said he will speed up the budget process for fiscal
2016, which begins on Jan. 1, by unveiling his spending plan in
September instead of October.
The city has not revealed how it plans to increase its
contribution to pensions for public safety workers, as mandated
by a 2010 Illinois law, if the payment restructuring bill does
not become law. The bill passed by lawmakers in May would reduce
the total payment by $220 million to $619 million from $839
million. The city's payments would increase every year from 2017
to 2020 but not as much as under the 2010 law.
(Reporting by Karen Pierog; Editing by Matthew Lewis)
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