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OIG 2010 Budget Options for the City

October 25, 2010

Summary

The Office of Inspector General’s drafted a report of Budget Options for the City of Chicago. This report contains 24 options to decrease City spending or increase City revenue.

Executive Summary

The impetus for creating this report is the City’s daunting fiscal challenges. Its recurring use of one-time revenues to address budget deficits and its under-funding of its pension system demonstrate that the City has a significant structural deficit in which its annual revenues are not sufficient to pay for its annual expenditures. When the recent budget deficits are combined with the spending increases necessary to properly fund the City’s pension system, the City faces an effective annual deficit above $1 billion. The structural deficit is of a magnitude that defies simple or one-time fixes. Additionally, waiting to confront this challenge will only exacerbate the already serious problem. Moving forward, the City must begin to reduce its spending through restructuring its operations and eliminating programs and subsidies or increase revenue by increasing taxes and fees, or, more likely, undertake a combination of the two. While this will require difficult choices, immediate action is the only way to prevent even greater hardship in the future.

OIG 2010 Budget Options for the City - publication cover