CHICAGO -- The Chicago City Council yesterday passed a $1.82 billion corporate fund fiscal 1994 budget that is balanced primarily through tax increases and fees.
To close a projected $35 million budget gap, the council approved a proposal by Mayor Richard M. Daley to increase taxes on utilities, liquor, and parking. The council also agreed to close a tax loophole on the sale of natural gas by independent brokers to help plug the gap, according to John Holden, a spokesman for the city's revenue department.
The budget does not include a property tax increase.
The $1.82 billion corporate, or operating, fund budget is part of a $3.4 billion all-funds budget that increased 2.4% over last year. Chicago's fiscal year begins Jan. 1.
The fiscal 1994 budget also includes $60 million of revenue bonds for sewer improvements. The council yesterday approved the bond issue, which will be sold in the first quarter of 1994, according to Holden. He said that the city has not chosen a team to underwrite the deal yet. Debt service funds for $160 million of general obligation bonds for street improvements that were sold Tuesday are also included in the budget.
In August, city officials projected a $102 million shortfall in the fiscal 1994 budget. This month, city officials said the gap was pared to $35 million through stronger than expected revenue growth, an early retirement program that attracted 1,600 to 1,700 city employees, and the shifting of some health- and crime-related services to the state.
Paul Devine, a vice president and assistant director at Moody's Investors Service, said that rating officials intend to discuss the budget with city officials. He said there do not appear to be any major issues of concern in the budget.
"It appears [the city] is continuing to work within their constraints," Devine said.
Jon Reichert, director of municipal surveillance at Standard & Poor's Corp., said that the city has passed a "very credible, conservative budget."
In October, city officials said they were considering selling delinquent property tax liens and fines to help reduce the shortfall. However, Holden said yesterday that city officials decided against the idea at this time because the city has not heard back from Cook County, which collects city property taxes.
Holden pointed out that a stable source of revenue such as property taxes would probably be tied to any lien sale, whether it involved property taxes, water bills, or parking tickets.
The Daley Administration attributed the projected budget shortfall to higher labor costs and lagging revenues. City officials also blamed the Illinois General Assembly's action earlier this year when to discontinue giving local governments money from a temporary state income tax surcharge. Chicago would have received $36 million in surcharge revenues in fiscal 1994, according to city officials.
Chicago has $1.83 billion of outstanding GO debt rated A-minus by Standard & Poor's and A by Moody's.
