Cook County Board President Toni Preckwinkle today released the preliminary forecast for the County’s Fiscal Year 2017 budget, signaling that difficult financial choices are on the horizon as the County develops its budget over the next several months.
Preckwinkle announced a projected operating shortfall for FY2017 of $174.3 million, driven by factors including gridlock over a state budget, growing legacy debt service costs and increased technology spending needed to upgrade antiquated and outdated systems.
A projected FY2016 year-end budget shortfall of $48 million will be closed by spending reductions via holdbacks in both personnel and non-personnel costs, expenditure reductions by the Cook County Health and Hospitals System and a new encumbrance policy that discontinues the practice of rolling over funds unspent by departments at year’s end.
“I introduced the preliminary forecast early in my administration to increase transparency in the budget process, determine potential fiscal pitfalls early and encourage public input,” Preckwinkle said. “This preliminary forecast provides a helpful appraisal of the County’s financial position as we develop the FY2017 budget. To close the FY 16 budget shortfall and address the FY 17 gap, we will have a number of tough decisions to make over the coming months.”
Uncertainty over a state budget has impacted Cook County’s FY2016 and will influence decisions necessary to form the FY2017 budget. The most recent monthly reporting period showed the state owes Cook County government $53.1 million, and an additional $57.4 million to the Health and Hospitals System from FY2016. A number of grant-funded programs could be at-risk depending on funding levels in the reported budget deal being deliberated in Springfield.
Total FY2017 expenditures in the General Fund are forecasted to rise, driven primarily by the County’s pledge to use higher sales tax receipts to pay down Pension Fund liabilities in 2017, amounting to an additional $80 million expense, along with increased spending on transportation infrastructure by $54.5 million, and dedicating $30 million to legacy debt service, consistent with commitments made last year.
Additional spending pressures are driven by rising personnel costs ($52.2M), higher employee health benefit costs ($13.4M, which are expected to rise at the rate of medical inflation) and increasing contractual service costs primarily supporting justice initiatives ($8.5M). Contributing non-personnel factors also include increased technology spending in the operating funds through technology upgrades and maintenance obligations ($14.3M) as the County continues to shift these expenses away from debt funding and moves these critical investments into operating funds .
Overall, County General Fund Revenues are projected to decline by 4 percent in 2017 versus 2016, other than property and sales tax revenues. Revenues from the delinquent tax sale process are projected to decline $12 million from last year based on the impact of State legislation to move up the tax sale date. Additionally, the County is experiencing flat or declining revenue in a number of areas including $10 million less from cigarette and other tobacco product taxes.
Preckwinkle noted that the forecasted gap does not include the potential negative implications a proposed constitutional amendment passed by the Illinois Legislature might have on the County’s public safety budget. The amendment will go to the voters in November and would require revenues derived from taxes and fees relating to vehicles to be dedicated to construction, maintenance and traffic-related costs of roads and bridges. The County continues to analyze this possible amendment but believes there is a risk of a negative impact on the County’s Public Safety programs should it be adopted in the fall.
The President pointed out that her administration has confronted tight fiscal times before and made the hard decisions to achieve balanced budgets.
“Since taking office, we’ve eliminated operating deficits of $1.6 billion, lowered the County’s headcount by 9.4 percent and reduced the County’s direct operating tax allocation to the hospitals system by over $260 million without compromising patient care,” she said. “The County has responsibly closed gaps before and we will do it again. We will navigate these tough times, make hard but necessary decisions, and confront our financial challenges without kicking the can down the road.”
In order to address the preliminary gap, the President has directed the budget department to look at contract savings, to delay hiring, and to implement additional personnel and non-personnel holdbacks. The holdback falls under the statutory discretion of the County’s budget director and serves as a savings mechanism by retaining, or holding back, dollars allocated to County departments in the budget.
A public hearing on the 2017 preliminary forecast will take place at 6 p.m. on July 19 in the Cook County Board Room on the 5th floor of 118 N. Clark St.
Residents will have an opportunity to provide testimony and engage directly with the President’s office on their budget priorities. The President’s office will live-stream the public hearing and residents can use social media to ask questions.
Beginning today, residents can visit the County’s budget website at www.cookcountyil.gov/budget to view the preliminary forecast and access more information about how the County allocates its resources.
An executive budget recommendation is anticipated in October, to be followed by public hearings and with a final vote in November.