Cook County Board President Toni Preckwinkle today released a preliminary Fiscal Year 2019 financial forecast with the lowest gap the administration has projected since she took office. The preliminary gap for the County’s FY19 budget is forecast at $81.8 million.
Closing the gap will again require difficult choices without new revenue, Preckwinkle said.
“Since taking office, we’ve eliminated preliminary budget gaps of $2.1 billion, reduced the direct operating taxpayer allocation to the hospital by $400 million, dramatically reduced headcount and cut expenditures by $850 million,” she said. “We are prepared to again make the difficult decisions necessary to close this budget gap and present a balanced budget.
“We will work with commissioners and the separately elected officials in the coming months to examine any areas where we can increase efficiencies, reduce costs and ultimately close this budget gap.”
Preckwinkle, through executive order, requires a Countywide review of finances mid-year.
“When I walked in the door, the County did not have a system in place to responsibly direct the budgeting process and provide a transparent look at what we were taking in and what we were spending,” Preckwinkle said. “The forecast released today will help direct our efforts to craft a responsive and responsible budget over the coming months.”
Total FY2019 expenditures in the General Fund are projected to increase by $62.9 million over FY2018 appropriated expenditures. This increase is driven by rising personnel costs ($29.5M) and higher employee health benefit costs rising at the rate of medical inflation ($10.1M). Contributing factors also include increased supplemental pension funding and technology related expenses ($10.3M).
A $10.5 million increase in expected revenue associated with national economic trends and a reduction in a sales tax administrative fee implemented by the state last year leave the total gap associated with the General Fund at $52.3 million.
Cook County Health and Hospitals System expenditures are expected to increase by $619 million from the FY2018 budget while revenues are expected to increase by $589.5 million, or 29 percent, leaving a $29.5 million expected deficit for FY2019. The sizeable increase in revenue and expenditures is almost exclusively associated with increased membership in the County’s Managed Care Community Network (MCCN) known as CountyCare.
The CountyCare patient population has increased to 331,000, which is a 130 percent increase since FY2017. Despite the projected gap the Health System continues to reduce its reliance on the local tax payer allocation, while continuing to provide approximately 50 percent of the charity care throughout Cook County.
Responsible fiscal practices led to the administration’s smallest-ever preliminary gap. The administration made structural changes – instead of one-time fixes – in FY18, including the elimination of more than 1,000 budgeted but vacant positions and about 200 layoffs. In addition, a reduction in overtime pay across the County, higher-than-expected revenue from the state, and positive national economy trends also played a role in reducing the size of the preliminary gap for FY19, Preckwinkle said. A year-end surplus of $600,000 is forecast due to gains in the Sales Tax revenue largely attributed to a one-time accelerated payment from the State.
To address the projected gap, Preckwinkle has directed the Budget Office to look at consolidations of redundant programs, services and real estate; promote contract savings; delay hiring and establish strategies to reduce costly overtime. In addition, she has directed the Revenue Department to ensure existing revenues are collected.
A public hearing on the preliminary forecast is scheduled at 6 p.m., on July 12 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 budget priorities. The public hearing will be live-streamed and residents can use social media to ask questions.
Cook County’s fiscal year begins Dec. 1.
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.