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Stroger to raise cigarette tax in 2006 budget
Michael Quigley drops out of race, endorses Claypool

Monday, December 19, 2005
Crain's Chicago Business
by Greg Hinz

Pulling a political surprise, Cook County Board President John Stroger Monday unveiled a proposed 2006 budget that relies only on one tax hike—a $1-a-pack increase on cigarettes—to close what he said was a $75 million hole in the $2.9 billion spending plan.

Mr. Stroger earlier had hinted at an increase in the real-estate tax, as well as other levies to fill what was described as a $300 million shortfall. That likely would have spurred a revival of bitter budget fights that broke out each of the past two years.

But facing a potentially strong re-election challenge in 2006, Mr. Stroger Monday said his financial team had been able to find nearly $100 million in personnel cuts, holding the overall spending increase in the new budget to just 1%. At the same time, he emphasized, crucial county services will continue undiminished, particularly at the county hospital.

“Our patients come first,” declared Mr. Stroger. With the cigarette-tax hike, “Our health system stays operational despite the federal government’s irresponsible cuts at this critical time.”

Business and civic leaders expressed relief that the wallet damage will be limited to cigarettes, even as Mr. Stroger’s political rivals urged him to cut even more.

“It’s certainly a much better budget that he’s proposed in the past couple of years,” said Laurence Msall, president of the Civic Federation, a watchdog group which had feared Mr. Stroger again would attempt to raise the hotel/motel, sales or other taxes. “We’re pleased.”

County Commissioner Forrest Claypool, who is running against Mr. Stroger in the March Democratic primary, said the $100 million in personnel cuts outlined as part of the budget are too small compared to overall budget growth in the incumbent’s decade in office. “The only way to truly change this government is to have a change at the top,” said Mr. Claypool.

Similar comments came from a GOP candidate for board chief, Commissioner Tony Peraica.

Another Democrat contender, Michael Quigley, said at a late-day news conference that he was withdrawing from the race and will endorse Mr. Claypool.

Mr. Stroger and aides mostly blamed the county’s budget woes on two factors: inflation, and a reduction in federal Medicaid spending available to support the county hospital. While Gov. Rod Blagojevich has agreed to make up $20 million of the loss in federal funds with state money, the county was unable to balance the budget and maintain services without the cigarette tax, which will bring in a projected $75 million a year, officials said.

The county also will benefit from a modest growth in sales and other home-rule taxes, totaling about $30 million over two years. But even with those increases the county had to draw down its unreserved funds balance from $120 million to a projected $66 million as of Dec. 31, county officials said. That’s less than the 5% of spending, or $100 million that local governments usually attempt to keep in the bank to assure stable operations.

Mr. Stroger said he hopes to rebuild reserves to the $100 million level, but set no timetable.

 



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