Cook County Board President Toni Preckwinkle released the preliminary budget estimates for 2012, projecting a shortfall of $315.21 million in the General Fund for 2012.
The release of a preliminary budget is a first for Cook County. Citing the need for a more effective budget process, President Preckwinkle issued an Executive Order on June 29th mandating a preliminary budget be issued by July 31st of each year.
"Government at all levels is facing serious economic challenges," President Preckwinkle said. "Requiring preliminary budget estimates is the first step in implementing a more transparent and accountable budget process. This allows us not only have a better sense of our financial landscape but to better engage our stakeholders, including County residents, in the budget process."
The decline in revenues is due primarily to delayed reimbursement/collection of patient fees, the .25% sales tax reduction, timing of the 2012 tax sale, increased cost of 2012 elections, and reduction in one-time revenue sources such as one-time collection of delinquent debt.
In order to produce a balanced budget, the focus of the next several months will be to work to reduce expenditures and work with all parties involved to identify ways to control the cost of government during this difficult economic time.
The President's Office has already met with union leaders, Commissioners and separately elected officials and asked for their ideas potential efficiencies or cost saving measures that will allow for the presentation of a balanced budget recommendation to the Board of Commissioners in October.
"I think the President has shown tremendous leadership by requiring this preliminary budget report," said Commissioner John Daley, Chairman of the Finance Committee. "She is sending a clear signal that we have to recognize the economic difficulties we face and work together to address these challenges."
While typically expenses would be expected to rise, the 2012 preliminary budget indicates a decrease in expenditures.
This is part due to the continued work the County is already undertaking to reduce expenditures. Already, the County has already made significant progress on its strategic sourcing efforts, an initiative from the Preckwinkle Transition Report, which reduces 2012 expenditures by close to $25 million. In addition, the County expects $4.5 million in budget savings due to the new electricity contract.
"With the steps that President Preckwinkle and her administration have already taken on health care benefits and electricity savings, we have already reduced the potential deficit by millions. We expect these continued efforts to yield even further savings as we work to close the gap, as well as through initiatives outlined in the City Collaboration report," said Andrea Gibson, Budget Director.
In addition to an initial projection of 2012 revenues and expenditures, the report also provides a mid-year estimate of current FY 2011 expenses and revenues through the end of the year.
The analysis of projected revenues and expenditures for FY2011 indicates that the General Fund for Cook County will have an estimated shortfall of $116 million by the end of the fiscal year. Expenditures are projected to come in under budget by $5.7 million and revenues will fall short by $122 million.
This shortfall is primarily due to slower-than-anticipated reimbursement/collection of patient fees at the Cook County Health and Hospital System.
President Preckwinkle is already taking several proactive steps to manage the expected decline in revenues, including ordering a 5% reduction in non-personnel spending, effective immediately.
"With the fiscal pressures related to rolling back the sales tax, managing the health system, pension and retiree healthcare benefit costs, we must be diligent in our work to increase fiscal responsibility and accountability throughout County operations," said Preckwinkle.
Additionally, the President's Office is continuing to work with the State to process patient applications as well as with other agencies on stabilizing other revenue declines.
In addition to a preliminary budget, Preckwinkle's June 29th Executive Order also called for a public hearing, which will be held August 25, 2011, in order to more fully engage the public in the budget process.
"It's important that the public gains a meaningful understanding of the $3.2 billion county budget and the role of the President, Board of Commissioners and the county's elected officials in the budget process," said Preckwinkle. "Quite simply, Cook County residents deserve to know how their tax dollars are being spent. We are going to open up the process in public hearings and give the citizens of Cook County the chance to weigh on the important decisions in the budget process."
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