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Preckwinkle asks new sin, use taxes, but cuts spending and payroll in new budget

Thursday, October 18, 2012
Crain's Chicago Business
by Greg Hinz

Mixing a few surprises with some already leaked news, Cook County Board President Toni Preckwinkle today is unveiling a proposed fiscal 2013 budget that relies on sin taxes and a new levy on out-of-county purchases, but also calls for spending less and having fewer employees on the payroll than last year.

And, in a boon for county vendors, Ms. Preckwinkle says she intends to pay the bills for purchases within seven days — down from 31 now and 67 when she took office.

In a briefing with Crain's editorial board earlier this week, the county's chief executive said she continues to make progress streamlining county operations and keeping her campaign promises. Included is the complete elimination of the penny-on-the-dollar sales tax pushed through by her predecessor, Todd Stroger. As scheduled, the last portion will disappear Dec. 31, 2013.

But the $2.945 billion operations budget is based on the assumption that the county will be able to extend Medicare to tens of thousands of low-income patients who now are treated free in the county's network of hospitals and clinics. The county technically is seeking a waiver under the new national health insurance program — Obamacare — and if the waiver is rejected or Republicans win the fall election and repeal Obamacare, the county won't get the $98 million it's expecting next year.

Ms. Preckwinkle said she doesn't think that's going to happen. "It's not a simple matter to just 'repeal it,' " she said. But she conceded that she has no guarantees.

On the revenue side, beyond booking the $98 million, Ms. Preckwinkle wants to implement a new $1-a-pack tax on cigarettes that she said would pull in $25.6 million a year, and $15 million from a use tax on large, untitled items such as refrigerators, building materials and office equipment worth more than $2,500 in aggregate that are bought outside Cook County but used in the county. A briefing paper dubs that "incentivizing businesses to buy within Cook County," and aides to Ms. Preckwinkle said a similar measure already is in effect in Chicago.

Ms. Preckwinkle also is proceeding with previously disclosed plans to levy a $1.3 million tax on gambling machines to fund public safety and a $1 million tax on firearms and ammunition — $25 a gun and 5 cents a round, respectively. Gun-rights groups have vowed to oppose both.

Also, as previously reported here, the county hopes to net $1 million a year by leasing to a private user the top two floors of its annex building across the street from the Daley Plaza.

Overall spending on day-to-day operations would be almost identical to this year, down just $10 million. But that's down about $100 million, roughly 3 percent, from last year, and the number of county employees would drop to a projected 21,172 next year from 21,823 in 2012 and 22,7442 in 2011.

Spending in the president's office would be the same as last year. Drops of 1 to 18 percent are budgeted for the public defender, county clerk, recorder of deeds and treasurer, but Ms. Preckwinkle said she has not yet reached agreement on cuts with Chief Cook County Circuit Judge Timothy Evans or Sheriff Tom Dart, who want spending increases.

The subsidy to the county's health system would remain the same as this year: $253.7 million, despite the anticipated $98 million Obamacare waiver. That means the system actually would be spending almost as much as it did in 2009 and 2010, $966 million.

System chief Dr. Ramanathan Raju said the money is needed to pay for rising numbers of indigent patients and soaring pharmaceutical costs. The money also is needed for accounting-system and other investments that eventually should allow the system to stabilize its finances, he said.

Ms. Preckwinkle was accompanied by John Daley, president of the board's finance committee. He said he supports the spending plan, which will be officially introduced at a noon meeting of the county board.

Other reaction was more mixed. For instance, County Commissioner John Fritchey termed the proposal overall “fundamentally sound and solid and honest.” But he predicted some of the revenue raisers will have trouble and are improperly being posed as social goods.

“If you just want to tax cigarettes, tax cigarettes,” Mr. Fritchey said. But raising the cost from $9.50 to $10.50 a pack isn’t going to discourage much smoking. “People will just go to Indiana.” And the ammunition tax on a standard, 2,100-round box of .22 bullets would boost the price from $85 now to $190, he said, predicting that tax will have particular difficulty passing.

Ms. Preckwinkle said she’d like to enact the budget by mid-November — months earlier than some of her predecessors’ budgets passed. The measure would cover the 12 months beginning Dec. 1.

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