CHICAGO -- Mayor Richard Daley yesterday proposed a $1.8 billion corporate fund budget for fiscal year 1994 that is balanced through tax increases, an early retirement program, and better-than-expected revenue growth.
The city may also turn to selling delinquent property liens and fines to raise money for the budget.
One thing the mayor is not planning to include in the budget is raising property taxes. Chicago's fiscal year begins Jan. 1.
In a speech to the city council, Daley proposed increasing taxes on utilities, liquor amusements, and parking. Daley also proposed closing the tax loophole on the sale of natural gas by independent brokers and imposing higher fees or fines as ways to plug a $35 million revenue gap in the budget.
In August, city officials had projected a $102 million shortfall in the upcoming budget. However Paul Vallas, Chicago's budget director, said yesterday that the shortfall was pared down to $35 million through stronger-than-expected revenue growth, an early retirement program that attracted 1,600 to 1,700 city employees, and the fact the state of Illinois has assumed some health and crime-related services for the city.
Vallas also said his office is researching the possibility of selling debt owed to the city in conjunction with Daley's budget proposal.
"We are talking to a number of interested parties in researching this, and in the next couple of weeks we hope to have a proposal," Vallas said.
The idea of the debt sale came from Alderman Ed Burke, chairman of the Chicago City Council's Finance Committee. Burke said the sale would be similar to one undertaken by Jersey City, N.J. in June. In that deal, Jersey City sold $44 million of outstanding tax liens to First Boston Corp. in return for about $25 million in cash and $19 million in the form of a subordinated note. First Boston then created taxable bonds backed by cash flows to be generated from future tax lien collections and privately placed them with institutional investors.
Vallas said that selling property liens could be problematic from a legal standpoint because Cook County, not Chicago, collects property taxes. However, he said that other debt, such as water bills and parking tickets, is being considered for the sale. Vallas said he could not estimate how much debt the city would consider selling.
Burke has said $450 million in unpaid traffic tickets could be sold in a deal similar to the one in Jersey City.
Daley told the city council yesterday that he will be flexible in working with aldermen to devise a revenue raising plan to balance the budget.
The Daley Administration has attributed the shortfall to higher labor cost and lagging revenues. City officials also blamed the Illinois General Assembly's action earlier this year to discontinue giving local governments money from a temporary state income tax surcharge. Chicago would have received about $36 million in surcharge revenues in fiscal 1994, according to Vallas.