2021 pandemic budget plan from Cook County Board President Toni Preckwinkle includes dipping into reserve fund, no tax hikes

by | Oct 16, 2020 | Banking | 1 comment

Chicago Tribune

Oct 15, 2020 5: 00 AM

Cook County Board President Toni Preckwinkle listens in as speakers discuss the impact of a potential repeal of the Affordable Care Act during a news conference at Cook County Health in Chicago on Oct. 7, 2src2src.

Cook County Board President Toni Preckwinkle listens in as speakers discuss the impact of a potential repeal of the Affordable Care Act during a news conference at Cook County Health in Chicago on Oct. 7, 2020. (Antonio Perez / Chicago Tribune)

Cook County Board President Toni Preckwinkle is scheduled to unveil a $6.9 billion plan for next year’s budget on Thursday that would not raise or introduce taxes but would dip into reserves in order to help plug an overall projected $409 million hole amid the ongoing coronavirus pandemic.

Preckwinkle will propose making the one-time transfer of $76.8 million from the county’s general fund reserve, which is estimated to be a little more than $400 million, to avoid tax increases and more critical cuts as the pandemic hammers local government revenues across the U.S.

In addition, hundreds of vacant positions, largely in the sheriff’s office, would be purged, certain fees would go up, and some health and hospital system employees would be laid off, according to a presentation with reporters on Wednesday. After a series of hearings, county board members are expected to vote on the budget on Nov. 24.

“Frankly, we’ve worked for a decade to put the county in a good place financially and we had, as a result, sufficient reserves to deal with this calamity,” Preckwinkle said.

With a $222.2 million forecast gap in next year’s general fund, which includes the finance, public safety and president’s offices, and a $187 million projected shortfall in the health fund, which includes the CountyCare insurance program and Stroger and Provident hospitals, the proposed budget would be balanced and still increase spending by $700 million from this year, Preckwinkle’s budget director Annette Guzman said. Most of the additional spending would be attributed to CountyCare’s increasing membership, and the budget was modeled on the assumption that no more federal stimulus funds are coming.

“This has been an extraordinarily challenging year,” Preckwinkle said. “A combination of the pandemic and the economic collapse of course have wreaked havoc with our families and our government at every level. But we’re very pleased to present to you today a budget that requires no new taxes.”

Besides the use of reserves, Preckwinkle’s plan to fill the general fund gap calls for the $61.3 million-saving elimination of 659 full-time equivalent vacant positions, an expected $27.7 million revenue jump from Chicago tax increment financing and county sales tax projections, and $50 million in reimbursements from federal CARES Act money before it expires in December.

The general fund budget would add up to $1.89 billion, a slight dip from this year, and 60.5% of it would go to public safety. But the budget for the sheriff’s office, which has become a target of numerous advocacy groups who want to defund and reallocate its budget, would drop about 7% to $573.2 million next year, under Preckwinkle’s proposal. Revenues, hit hard by the pandemic, are overall likely to continue decreasing by about 4.8% next year despite a new influx of online sales, cannabis and sports betting tax revenues.

Preckwinkle’s plan would introduce some cuts to personnel and services at the public hospital system to balance the deficit, spurring a nurse’s union to announce an upcoming protest outside the county’s downtown headquarters following her planned budget speech on Thursday. That plan includes laying off 130 workers by the end of Dec. 1, and enacting consolidations and downgrades across hospitals.

Her proposal also would inject $30 million more in the county’s tax allocation to the system, bringing it to $122.7 million, and predicts additional money from rate negotiations, immigrants living in the country without legal permission enrolling in a Medicaid-like plan under a new state law, revenue cycle improvements and more.

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The $3.39 billion health fund budget also would be increased by $563.4 million from 2020′s total and would account for a $465 million increase in membership for CountyCare, more staffing at the jail’s hospital due to social distancing and a commitment to dole out an anticipated $312 million in uncompensated care.

Despite the proposed cuts, the budget plan reflects some of Preckwinkle’s messaging on racial equity during the pandemic as well. An additional $20 million will go toward public safety efforts in the next two years such as violence prevention programs, reentry for formerly incarcerated people and restorative justice courts. Another $20 million will bolster small business assistance, workforce development and housing assistance.

“(The pandemic has) highlighted the need for looking at racial equity in the programming and services that we invest in and the resources that we have at our disposal,” Preckwinkle said. “It’s shone a bright light on the impacts of inequity, particularly in terms of who got the disease, who succumbed to the disease and the impacts on Black and brown communities.”

Nonetheless, long-term trouble looms for Cook County’s finances. Should the pandemic follow a “worst-case scenario” without a working vaccine until 2022, there could be a $328.3 million dip in the fund balance compared with the current middle-of-the-ground projection. And even without that development, the projected deficit could land at around $86.7 million due to expenses outpacing revenues. Some of that is because the county’s base property tax levy has failed to keep up with inflation.

“Sustaining our investment in equity, making sure that we’re not raising taxes, especially in a time where a lot of our residents are hurting, and also avoiding a critical cost,” county Chief Financial Officer Ammar Rizki said. “We’re hitting on all fronts to be able to address the needs across the board.”

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