Chicago official predicts even worse budget problems in 2010

The Chicago Tribune reports:

Mayor Richard Daley's administration Thursday predicted a gaping hole in next year's budget that will eclipse the current financial problems -- even after the city exhausts its brand-new $320 million rainy day fund.

The anticipated $6.2 billion budget for next year could be more than half a billion dollars in the red because of plummeting tax collections and rising wages that account for more than 80 percent of the city's day-to-day spending, said Chief Financial Officer Gene Saffold. He announced the gloomy prediction as Daley aides began briefing aldermen in anticipation of public hearings next month.

Although higher taxes are "a last resort . . . nothing is ruled out at this point," Saffold said. "The mayor has instructed us not to look at property taxes as we move forward in 2010."

Daley has laid off city workers and pressured unions to take unpaid days off to save money this year, and aldermen and outside budget experts predicted that personnel cuts were likely next year. The biggest chunk of increased spending next year will come from $117 million in higher wages, benefits and pension fund payments, Saffold said.

Yet, Chicago thinks they can afford the Olympics in 2016.