Chicago mayor takes budget steps, warns of layoffs

Reuters News
Posted: Jul 01, 2011 2:04 PM
Chicago mayor takes budget steps, warns of layoffs

CHICAGO (Reuters) - Chicago Mayor Rahm Emanuel on Friday outlined a plan to fill $20 million of a $31 million budget gap but said city unions will have to help plug the rest.

Emanuel, President Barack Obama's former chief of staff who took office in May, said $10 million in savings would come from not filling up to 200 positions, while another $10 million would be saved through a partnership between the city's public health department and federally qualified community health centers.

As for the $11 million remaining gap in what he called "a smoke and mirrors budget" he inherited from former Mayor Richard Daley, Emanuel said he was waiting on labor unions.

"I'd like them to be the partner in the workplace reforms so workers don't lose their jobs," Emanuel told reporters, referring to the possibility of 625 layoffs.

He added that he was dropping an unpaid furlough day program that was unpopular with workers. Daley started the program as a way to cut costs but his deal with unions on furloughs ended on Thursday. The current $3.26 billion corporate fund budget assumed the savings for the entire fiscal year, which ends December 31, leading to the $31 million gap, according to Emanuel's office.

The new mayor faces a daunting budget-balancing challenge in the coming fiscal year, which has a projected deficit of $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.

(Reporting by Karen Pierog; Editing by James Dalgleish)