CHICAGO -- The Chicago City Council last Friday approved a $3.24 billion fiscal 1992 all-funds budget that eliminates a projected $124 million shortfall but does not include pay raises for unionized city employees whose contracts expire Dec. 31.
Noelle Gaffney, a spokeswoman for Mayor Richard Daley, said the city does not expect to sign new contracts with the unions until February at the earliest, well after the new fiscal year begins on Jan. 1.
Ms. Gaffney said the budget would have to be amended if the new contracts require any additional salary or benefit expenditures. She also said Mayor Daley has not made any decisions about possible budget cuts or tax increases to fund potentially higher personnel costs.
"The mayor has just said we will have to begin negotiations and see what happens," Ms. Gaffney said.
City officials have said the 37,399 unionized employees represent 87% of the city's $1.1 billion annual payroll and that each 1% increase in salaries would cost $11 million.
Steve Trossman, a spokesman for the American Federation of State, County and Municipal Employees, a union that represents 7,500 city workers, declined t reveal what the union might be seeking in its new contract. He added that he does not expect negotiations to be concluded before the current contract expires at the end of this year.
"We'd like to negotiate the contract as soon as possible, but we're not going to be too concerned if we go beyond the expiration date," Mr. Trossman said.
Mayor Daley said when he proposed his budget to the council on Oct. 15 that he would focus in the upcoming negotiating sessions on reducing health-care costs, which he estimated at $6,000 per worker annually.
The budget, which was passed in a 30-to-18 vote, includes a reduction of 1,474 city jobs and the merger or elimination of some city departments for an estimated savings of $46 million, according to budget documents.
New and higher taxes totaling $84 million also were used to help balance the budget approved by the council. These included $25 million in higher property tax collections, garnered by rescinding an abatement granted in 1990, and a new 5% tax on out-of-state telephone communications that is expected to raise $20 million.
Todd Whitestone, a managing director at Standard & Poor's Corp., said the fact that the city was able to balance its budget during hard fiscal times was a good sign the administration will be able to handle future budget pressures.
"From our perspective, they look like they are willing to make the tough choices, and that gives us some comfort they will be able to make those choices again if they have to," Mr. Whitestone said.
Diana Roswick, vice president and assistant director of regional ratings at Moody's Investors Service, said the rating agency was pleased with the city's cuts and revenue increases, but added that the new union contracts could be a strain in fiscal 1992.
The budget calls for the issuance of $287.4 million of tax anticipation notes and $35 million of equipment notes next year. John Holden, a spokesman for the city's revenue department, said no new long-term general obligation or revenue debt was included in the budget.
However, the city will consider refinancing existing debt throughout the year, he noted.
Chicago's GO debt is rated A-minus by Standard & Poor's and A by Moody's.
