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Preckwinkle forecasts county’s smallest budget gap in a decade, no new taxes or fees planned
Wednesday, June 22, 2022 Chicago Tribune by A.D. Quig
Cook County Board President Toni Preckwinkle delivered a bit of good news ahead of Tuesday’s primary election: her administration’s budget gap forecast is the lowest it’s been since she took office.
As a result, Preckwinkle said Wednesday she’s not planning any new taxes, fines, fees or layoffs in her 2023 budget proposal. “We’re going to just figure out how we can be more effective with the resources that we have,” she said.
Preckwinkle is running for reelection and faces former Cook County Commissioner Richard Boykin in Tuesday’s Democratic primary.
County finance officials said the projected budget gap heading into the 2023 fiscal year would be just $18.2 million — compared with a total 2023 budget of $8.1 billion — thanks to better than expected revenues from sales taxes, certain corporate income taxes and from fees to the county clerk that have been fueled by the recent construction boom.
In addition, the tight labor market is leading to longer hiring time frames, keeping payroll costs lower, county officials said. Higher revenues and lower expenditures are expected to create a $233 million surplus in the county’s general fund.
Next year’s forecasted gap is a dramatic dip from the height of the pandemic. Preckwinkle’s 2021 budget had a nearly $410 million shortfall, forcing her to tap into the county’s rainy day fund and lay off workers to balance the budget. The following year, revenues rebounded and federal aid helped shrink the deficit to $121 million.
“We entered into this very difficult pandemic period on a really strong financial footing, and as a result we’ve been able to weather it a lot better than other local governments. And we find ourselves now in the position where, as the economy is emerging from some of the pandemic challenges in a really good place,” Preckwinkle told reporters at a Wednesday briefing.
In all, the county received $1 billion from the federal American Rescue Plan Act (ARPA). Commissioners have already authorized nearly $300 million in ARPA spending on programs such as the county’s $42 million guaranteed income pilot initiative and $65 million in grants to violence prevention groups.
But there are possible storm clouds. “There are indications of a recession on the horizon,” county budget director Annette Guzman said, which could lead to significant declines in county sales tax and other economically sensitive revenues.
The county’s health fund could take two other hits in the coming year. The state is expected to restart annual eligibility reviews for Medicaid — known as redetermination — in the coming months. That would likely result in thousands of current patients of Cook County Health’s Medicaid-backed insurance plan, CountyCare, losing their coverage, and the county losing out on reimbursements. That redetermination process could also send more uninsured patients to Cook County’s hospitals and clinics, driving up charity care costs.
The county could also lose out on new enrollees and the revenue that comes with them. Half of the Medicaid managed care patients who don’t choose a provider get automatically enrolled by the state in CountyCare. Officials are planning, conservatively, for that number to drop to 35% — its pre-pandemic level — later this year.
There are other long-term costs. After several years trying to cut down on head count, the number of county workers is up 7% from last year. Over time though, the workforce has shrunk slightly — the county has 23,467 budgeted full-time employees, compared to 23,801 in 2011. And ARPA-funded programs such as the guaranteed income pilot, anti-violence funding, a new behavioral health department and a plan to abolish medical debt are also costly in the long term.
“The ones that are more transformational are probably going to have the highest price tag,” Guzman said.
The county does have fallback cash: Reserves are expected to be as much as $900 million by the end of the year. That’s enough to fund county operations for roughly six months.
Preckwinkle won’t formally introduce her budget until October.