Chicago mayor to lay off workers to plug budget gap

Reuters News
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Posted: Jul 15, 2011 6:09 PM
Chicago mayor to lay off workers to plug budget gap

CHICAGO (Reuters) - With Chicago still facing a lingering deficit in its current budget, Mayor Rahm Emanuel on Friday unveiled steps that will lead to up to 625 layoffs.

They include privatization of custodial services at city libraries and airports, benefits services and the water billing call center. Also about 126 seasonal workers in Chicago's transportation department would be discharged, resulting in a drop in curb, gutter and sidewalk improvements this year.

"Today, I'm taking steps because I cannot wish away this budget shortfall," the mayor told reporters.

Earlier this month, Emanuel said he would eliminate $20 million of the $31 million budget gap by not filling up to 200 positions and partnering the city's public health department with federally qualified community health centers, but he left the remaining $11 million up to city worker unions.

On Friday, the mayor released nine work-rule changes he said he proposed to unions. The changes, which would collectively save the city about $18 million, while preventing layoffs, have not been agreed to by the unions, he said.

American Federation of State, County and Municipal Employees Council 31 Executive Director Henry Bayer said Emanuel's administration had made no attempt to negotiate the work-rule changes and that his union and the Chicago Federation of Labor were jointly conducting a review of city operations to develop cost-saving recommendations with input from workers.

"We will continue in that endeavor, despite the mayor's irresponsible actions today, because we believe it is the best way to make Chicago the city that works even better," Bayer said in a statement.

The mayor was informed earlier this week that those recommendations would not be ready by Friday, according to a statement from Chicago Federation of Labor President Jorge Ramirez.

"We aren't stalling. We are serious about this process and we want to do it right," he added.

Emanuel said he continues to be open to any cost-saving ideas the unions might have.

"I asked labor to be my partner and I continue to ask labor to be my partner," he said.

The $3.26 billion corporate fund budget assumed savings from unpaid employee furlough days for the entire fiscal year, which ends December 31. But the union agreement over furloughs ended on June 30, leading to the $31 million gap.

Emanuel must soon put together a fiscal 2012 budget, which is facing an even more daunting deficit projected at $700 million.

Like other U.S. cities, Chicago's revenue tanked due to the recession, while the housing market's collapse eroded property values and depressed real estate transaction tax collections.

The use of one-time measures that have exacerbated Chicago's structural budget imbalance led to downgrades of the city's debt ratings last year.

(Reporting by Karen Pierog; Editing by James Dalgleish and Andrew Hay)