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‘Everything is on the table,’ Cook County board President Toni Preckwinkle warns as 2021 budget gap forecasted to be largest in a decade

Friday, June 26, 2020
Chicago Tribune
by Alice Yin

Cook County could incur a projected $410 million budget gap during the next fiscal year — the largest hole since 2011 and a sign of the extent the coronavirus pandemic has capsized local government finances.

A steep reversal of fortune from the anticipated record-low budget gap this year before COVID-19, the grim forecast means the county is mulling over hiking taxes, slashing existing funds, laying off employees and more to balance the budget, Cook County board President Toni Preckwinkle said Thursday.

“Everything is on the table,” Preckwinkle said in a call with reporters when asked about potential new taxes and layoffs, though she did not elaborate. While noting a vaccine is possibly a year away, she added, “the course of a pandemic is not within our control … so the challenges we face are not of the moment. They’re of the next several years.”

The $410 million figure comes from the combined deficits in the general and health funds, which are projected to rise to approximately $222 million and $187 million, respectively. It is a “middle-of-the-road” forecast that assumes there will not be more federal funding beyond the CARES Act to cover expenditures, county Chief Financial Officer Ammar Rizki said.

“We do anticipate that we will have moved into phase five of the recovery by next year,” budget Director Annette Guzman said. “However, we’re also anticipating and building into our models the potential of a resurgence of the virus at the end of this year, in the fall, in the winter, and needing to address that.”

The federal CARES Act has provided the county $429 million to offset direct expenditures from COVID-19, but the cash does not apply to lost revenue. Preckwinkle said she is hopeful the proposed federal HEROES Act, which would address lost revenue for local governments, will move forward in the GOP-controlled U.S. Senate this summer after more lobbying from the National Association of Counties with which she is working.

“We — all of us — desperately need help with lost revenue, and the federal government can provide that,” Preckwinkle said.

As the county loses out on sales, amusement and other nonproperty taxes throughout the coronavirus outbreak, total revenue for the general fund is expected to continue declining, though at a slower rate, by 7% next year while expenses may rise by 5%. Some of the expenses are driven by further responses to COVID-19, such as health care costs for procedures that were delayed until 2021 and overtime costs for public safety officers addressing the pandemic.

Meanwhile, the health fund revenue is expected to rise by 14% due to Medicaid memberships going up and likely peaking around September following widespread unemployment. But expenses are projected to balloon by 21% because of third-party managed care claims and contracts. All the while, the county must address the enduring pressure of uncompensated care, which is free medical care that Stroger and Provident hospitals provide to patients unable to pay their bill.

For this fiscal year, a $220 million general fund gap is projected as revenues are expected to drop about 15% and expenses may rise by 4%. The health fund will possibly lose out on $61 million despite anticipated revenues rising 11% because expenses will likely climb by 14%.

To address the shortfall, the county already cut funds by 6.5% to recoup $94.5 million. The Cook County Health and Hospitals system already has eliminated more than 70 nonunion administrative and manager positions to save $5 million this year and is working to cancel or renegotiate its contracts with outside agencies to recover another $30 million. More Cook County employees could stand to see furloughs and layoffs as well.

Dipping into reserves funding and delaying pension contributions “would not be the first thing I want to take a look at,” Rizki said, but those options, too, are being explored.

“Kicking the can is not something that we’d like to do, but unfortunately this is a tough time, not of our own doing,” Rizki said. “That just goes to show in terms of the uncertainty that you know we are seeing in terms of this pandemic.”

A public hearing on the financial projections is scheduled for July 16, while the Cook County board of commissioners will vote on the final budget mid-November.

An earlier version of this story incorrectly said the Cook County Health and Hospitals system had laid off 70 employees; the agency has eliminated 70 positions.

CONTACT

Alice Yin works the overnight shift at the Tribune, responsible for covering whatever breaks. She is a Medill School of Journalism graduate and was a statehouse reporter for the Associated Press in Michigan before being hired last summer by the Sun-Times. Alice likes to explore new restaurants, go jogging and frequent bookshops.
 
 



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