CHICAGO -- The Chicago City Council approved a $1.76 billion operating budget for its fiscal 1993 budget yesterday that eliminates an $89 million projected shortfall through layoffs, revenue increases, and budget cuts.
The all funds budget also approved by the council yesterday is $3.33 billion.
The budget for the fiscal year that begins Jan. 1 is balanced through a $28.7 million increases in property taxes, a new 10-cent-per-gallon tax on soft drinks that is estimated to raise $5 million a year, a 2% increase in the amusement tax to raise $4.5 million, and a new $1 admission fee at off-track betting facilities that is expected to generate $1 million.
Spending cuts and increases in some business license fees combined with 740 layoffs and the elimination of 560 positions make up the rest of the gap, according to city officials.
While Mayor Richard Daley had called for a $48.7 million property tax increase when he proposed the budget last month, aldermen substituted some of the new revenue sources to cut the proposed property tax hike by $20 million.
"Given the tough economic times, everyone has to share in the sacrifice," Daley said in a news release. "This compromise budget demands the smallest possible sacrifice from the broadest cross section of the the city."
The budget includes 3% raises for its 37,400 unionized employees. The City Council yesterday ratified contracts that extend to June 30, 1995, with the majority of the city's unions. The raises are retroactive to Jan. 1, when the union contracts expired.
John Holden, a spokesman for the city's finance department, said that while negotiations with police and fire unions are still in arbitration, the budget includes a 3% raise for those employees.
The city's budget does not address the $26.8 million of revenue the city may lose if a temporary Illinois income tax surcharge is not renewed next year. That surcharge is scheduled to expire June 30. City officials have said they will join with other municipalities in urging the state to make the surcharge permanent.
The Daley administration had dubbed the budget "bad news, part two," after the city was forced to eliminate a $124 million shortfall in the current fiscal year budget through job eliminations, departmental consolidations, and new and higher taxes.
The shortfall for fiscal 1993 had stood at $116 million in July, but revenue enhancements and budget cuts proposed by the administration trimmed the gap to $89 million. City officials have blamed the shortfall on the recession, higher costs for health-care benefits, and state-mandated programs.
Alderman Ed Burke pointed out that under the new budget, city employees for the first time will be contributing to their health care costs.
The City Council also approved the issuance of $270 million of tender notes. First Chicago Capital Markets will serve as senior manager of the deal, which is slated to be priced in mid-January.
In addition, the council passed a measure allowing for the refinancing of $296 million of special airport facility revenue bonds, sold by the city in 1993 and 1984 for American Airlines. Goldman, Sachs & Co. will serve as senior manager for this deal.
Jon Reichert, a director at Standard & Poor's Corp., declined to comment on the budget until the agency could review it. The rating agency rates $173 million of the city's GO debt A-minus.
Officials from Moody's Investors Service did not return phone calls. Paul Devine, a vice president and manager of the Great Lakes Region at Moody's Investors Service, said the agency considered Daley's original proposed budget a "responsible spending plan." He added that, given the new revenue sources included in the budget by the City Council, the agency was confident that the city will take corrective budgetary action if needed.
Moody's rates $193 million of the city's outstanding general obligation debt A.