Layoffs, tax hikes possible as county braces for two years of budget holes
Cook County Board President Toni Preckwinkle said Thursday “everything is on the table” as county officials brace for a budget gap the COVID-19 crisis has stretched to nearly $281 million for the rest of the fiscal year and possibly as much as $409 million for next year.
That could mean new taxes, furloughs and layoffs. Seventy positions already have been cut, and about 35 people were laid off at the county’s health system over the past week, Andrea Gibson, Cook County Health’s interim chief business officer, said Thursday.
“This is the largest budget gap we’ve seen in almost a decade, so we’re going to be looking at holdbacks, we’re going to be looking at delaying purchases, renegotiating contracts with our vendors, a variety of strategies to meet the challenge that we face,” Preckwinkle said.
How many workers ultimately will need to be laid off is still “to be determined,” the board president said.
County officials laid out their preliminary budgets for the rest of the 2020 fiscal year and projections for 2021 on Thursday, painting a grim fiscal picture for the county’s pocketbook in the midst of the coronavirus pandemic.
The 2020 shortfall is composed of two parts. One is the general fund, which covers offices controlled by Cook County Sheriff Tom Dart, Chief Judge Timothy Evans, Cook County State’s Attorney Kim Foxx and others. The other part is the health enterprise fund, which covers the county’s health apparatus.
The county projected a $219.7 million gap between its finances and its adopted budget and a shortfall of $61 million with the health fund, officials said.
In 2021, officials project those deficits will balloon to $222 million for the general fund and $187 million for the health fund.
The county already has implemented some corrective steps, such as reducing some contracts and administrative positions in the health system, using federal emergency dollars and taking back 6.5% of funding to some departments and other elected officials’ offices in a move called a holdback, to address the current budget gap.
In a memo to the county’s Board of Commissioners Monday obtained by the Sun-Times, Annette Guzman, the county’s budget director, urged the various departments to submit their preliminary budgets by July 24 and to use the time until then “to formulate a leaner and responsible budget that reduces costs, improves efficiencies, and prioritizes the required core functions of your office.”
As dire as the projections are, Ammar Rizki, the county’s chief financial officer, said they are based on a “middle of the road” scenario.
“One of the unique things for this year and next year is that we just don’t know how the pandemic is going to play out,” Rizki said. “As we look at next year’s projections specifically, there are three sets of projections that we’ve looked at: a worst case, a middle-of-the-road case and a more optimistic case.”
A potential second wave of COVID-19 later this year also could affect the county’s fiscal health as officials work on finding a “delicate balance” between the county’s finances and the services it offers, Rizki said. Every month that the economy is in “a suspended state like it is right now,” the county could see another $25 to $30 million tacked onto its budget gap.
Overtime expenses, as well as the purchasing of supplies to address the virus, have driven up the county’s expenditures, while dramatic decreases in the county’s sales, amusement, county use and hotel accommodation taxes have driven down the county’s incoming revenue.
An increase in managed care claims and professional services, as well as an increase in salaries and wages due to internal hiring and overtime, is largely driving the 2020 gap on the Cook County Health side.
The county has received $127 million in one-time federal aid through the Coronavirus Aid, Relief, and Economic Security Act and saw an increase of $141 million in revenue thanks to auto enrollments in its CountyCare program.
The expected shortfall is an increase from April projections.
Since then, Preckwinkle and others have worked to lobby the federal government to pass the Health and Economic Recovery Omnibus Emergency Solutions, or HEROES, Act, which passed the U.S. House in May. Preckwinkle says that bill would help governments such as the county that have lost revenue.
“All of us desperately need help with lost revenue, and the federal government can provide that just as they provided support through the CARES Act, and we’re hopeful that some action will be taken this summer,” Preckwinkle said.