Chicago revenue up, fiscal 2013 budget gap smaller

Wed Sep 26, 2012 10:26pm IST

Related Topics

* Projected FY 2013 gap falls to $298 mln

* Gap lowest since economic recession

* Increases in most taxes off table in upcoming budget

CHICAGO, Sept 26 (Reuters) - Some of Chicago's key revenue sources came in over estimates in the first half of fiscal 2012, while the city's projected 2013 budget gap has dropped to $298 million from $369 million in July, Mayor Rahm Emanuel's office reported on Wednesday.

Chicago's structural budget deficit for the fiscal year that begins Jan. 1 has fallen from an initial $741 million projection amid revenue growth and as cost-saving measures took hold.

The $298 million projected structural deficit is the lowest since the 2008 economic recession, according to the mayor's second-quarter budget report.

"The administration's aggressive fiscal management and ability to deliver services more efficiently has resulted in millions of dollars of savings for taxpayers," said Chicago Budget Director Alexandra Holt in a statement.

While a warm winter depressed the city's utility tax, revenue from sales, state income and real estate transfer taxes came in above estimates, the report said. It added that expenditures were on track with spending on contractual services and healthcare below levels in the $6.3 billion fiscal 2012 budget.

Emanuel, who is scheduled to unveil his fiscal 2013 budget to the city council on Oct. 10, has ruled out hikes in property, sales, fuel or amusement taxes, but wants to end a per-employee fee paid by businesses ahead of schedule and is considering a cigarette tax increase, according to a spokeswoman.

Like other U.S. cities, Chicago's revenue fell sharply due to the economic recession, while the housing market's collapse eroded property values and depressed real estate transaction tax collections. The use of one-time measures, including tapping reserve funds to help balance budgets under former mayor Richard Daley, contributed to downgrades of Chicago's credit ratings in 2010.

In April, Moody's Investors Service revised the outlook on Chicago's Aa3 general obligation rating to "negative" from "stable" due to a lack of a detailed plan to deal with the city's burgeoning unfunded pension liability.

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