Cook County Board President Toni Preckwinkle today presented her Executive Budget Recommendation for the Fiscal Year 2016 budget to the Cook County Board of Commissioners. The proposed budget represents a comprehensive plan to increase efficiency and cut the County’s tax-supported expenditures by almost $108 million to responsibly address its fiscal challenges for the long term.
Requiring a number of difficult choices and compromises, the roughly $4 billion budget is the product of months of discussions between commissioners, separately elected officials, County departments, union officials and the public.
The FY 2016 Executive Budget Recommendation is highlighted by key Preckwinkle initiatives to permanently sustain the reduced jail population, realign and reduce the County’s real estate footprint to structurally reduce costs, fund critical technology investments to modernize County government, and continue the shift from inpatient to more efficient, patient-centric and less costly outpatient care at the Cook County Health and Hospitals System (CCHHS).
“We’ve had no shortage of difficult decisions to make, but this budget will help stabilize our financial position and fiscal structure by tackling our problems head-on,” Preckwinkle said. “Over the last five years, we have solved for more than $1.6 billion in combined budget deficits by encouraging smart spending, modernizing the County and pushing to do more with less.”
The President’s budget closes a $198.9 million shortfall that was projected in June.
A total of $107.8 million in cost reductions are included in the FY 2016 budget:
· $32.6 million in personnel savings;
· $12.8 million in management initiatives including the demolition of three divisional jail buildings;
· $10.8 million in employee health benefits savings in large part reflecting negotiations with the County’s union partners;
· $12.6 million from consolidating and eliminating programs;
· $39 million reduction in the CCHHS operating tax allocation.
Additionally, the gap was addressed through:
· Revenue exceeding preliminary budget expectations, increased enforcement on taxes as well as reimbursements from the State of Illinois and the County’s share of TIF surplus funds contributed a total of $44.4 million;
· Closing amusement tax loopholes and implementing a tax on e-cigarettes that will generate $21.8 million;
· In addition to addressing the Pension Fund’s shortfall and transportation infrastructure needs, the sales tax revenue contributes $25 million to legacy debt service and $2.5 million to technology.
Preckwinkle reiterated her commitment to pushing for criminal justice reforms aimed at further reducing the jail population. Collective efforts in recent years have reduced the population to its lowest level since 1991. This sustained jail population reduction will allow Cook County to demolish three buildings on the Department of Corrections campus to save more than $3 million in FY 2016 and avoid $188 million in capital costs over the next decade.
“This is a momentous step toward a criminal justice system that is more efficient, responsive to individual circumstances and less costly to taxpayers,” Preckwinkle said. “Bringing down the jail population is allowing us to bring down older buildings that are costly to maintain. As we see declines in non-violent pre-trial detainees, it is logical and fiscally responsible to reduce the number of divisions at the jail.”
On the public health front, the President’s office worked closely with the health system to continue to reduce local taxpayer funding of the system. Through its CountyCare program, Cook County’s uninsured population has dropped to the lowest level on record, declining from 56 percent in 2012 to approximately 32 percent in 2015. As a direct result of these efforts, in FY 2016 the operating tax allocation to the Health System will be $125 million, $39 million less than the 2015 level. This also represents a 68 percent, or $264 million, reduction from the year before Preckwinkle took office, even as services to residents have improved and expanded.
Preckwinkle also stressed Cook County’s commitment to investing in technology to build a more modern, responsive and efficient government for generations to come. In FY 2016, the County will introduce a Countywide biometric time and attendance system that will automate timekeeping, reduce fraud and create savings as part of a larger comprehensive strategy across the County to reduce overtime by $14.6 million. Additionally, integrated taxation systems, including a single system to serve all of the property tax offices, is moving forward to improve the experience for the taxpaying public.
The budget takes steps toward long-term fiscal responsibility by creating efficiencies and modernizing County operations, but it includes a number of tough decisions. The County will be reducing the overall workforce as measured by full-time equivalents (FTE) positions by 1.2 percent in FY 2016, largely by eliminating vacancies but also with some layoffs. Added to previous reductions, the County’s overall workforce will be 9.4 percent smaller than when Preckwinkle took office in 2010.
The budget also envisions savings by further shrinking its physical footprint. In the last two weeks, the County negotiated with a private landlord a termination option for space used by its Child Support Division of the Circuit Court of Cook County.
The net present value of the 10-year cost savings produced by this termination is almost $4 million. This is in addition to recently announced real estate consolidation and realignment initiatives that are expected to reduce County building square footage by the equivalent of 4.5 football fields in FY 2016, with estimated annual operating savings of more than $1.3 million.
In the coming year, plans will be finalized to further consolidate from the County’s two general warehouses into one, shrinking occupancy by more than 400,000 square feet by 2018. The County has also set a target of leasing an additional 75,000 square feet by 2018 at 69 W. Washington as part of its ongoing initiative to reduce the real estate footprint of County government by more than 1 million square feet by 2018.
After a generation of kicking the can down the road, Preckwinkle is moving to put the County on firm financial footing for the future. This budget contains an approved increase in the sales tax rate which, when coupled with more than $100 million expenditure reductions and reforms, will provide the financial support needed to begin addressing the Cook County Pension Fund’s $6.5 billion shortfall.
Revenues obtained from the sales tax will also be used to invest millions of dollars in much-needed road infrastructure improvements and address higher legacy debt service payments that are on the horizon. President Preckwinkle noted that the County’s General Fund, net of the $270.5 million in pension funding from the sales tax, is up a modest 2.2 percent in the coming year, consistent with third-party survey forecasts for inflation in 2016. The combined General Fund and Health System operating tax allocation declined 0.4% in FY 2016.
Preckwinkle will continue to push for more efficient County operational spending in this budget. Combined spending in the General Fund plus the CCHHS operating tax allocation has declined since 2010 by 9.4 percent. This reduction is $331 million, or 18.9 percent on an inflation-adjusted basis, when measured in 2010 dollars. Nonetheless, the County continues to see growth in legacy debt service and pension costs in the FY 2016 budget, which has increased by 90 percent since the 2010 budget, a trend that will continue to pressure County operations in the years to come.
The budget also includes a package of proposals aimed at closing exemptions in the amusement tax for in-home cable, ticket resellers and recreational activities such as golf, while holding the tax rate steady at 3 percent. The amendments will allow the Cook County Department of Revenue to collect an estimated $20.25 million in the coming year, without changing the underlying tax rate.
Additionally, the budget amends the County’s tobacco tax ordinance to include e-cigarettes and e-vapor products to be taxed at $.20 per milliliter. This will treat e-cigarettes like other tobacco products, as studies have shown that these products are increasingly being marketed towards youth. This change is expected to generate $1.5 million.
“This has been a difficult budget but the end result will be a more streamlined and efficient government in the years to come,” Preckwinkle added. “I’ve been saying for over a year that this would be a challenging budget and that we cannot put off tough decisions any longer. This budget provides a sensible path to long-term stability and a more effective Cook County government.”
All budget information has been posted to the Cook County budget website, allowing the public to review documents and engage with the President’s Office directly. There will also be public hearings scheduled on the 2016 budget over the coming weeks.
To view the Budget website, please go to cookcountyil.gov/budget/