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Cash Crisis: Daley Plans City Shutdown, Tax Hikes

Mayor Unveils Budget That Will Close City Government For Three Days To Help Plug Nearly $500 Million Deficit

CHICAGO (CBS) ― Mayor Richard M. Daley unveiled his 2009 budget plan to the City Council Wednesday morning, and it includes moves that are likely to raise revenue, and also raise anger.

There was a warning for the taxpayer in Mayor Daley's budget address – a slow response to everyday city services such as fixing streets, repairing streetlights and towing cars. The mayor said the reason for this was the declining economy. He mentioned the economy 20 times in the address.

The pared-down budget looks to cover a $469 million shortfall. In presenting the budget, Mayor Daley told city leaders that this is "no ordinary year."

"Our country's economy has slowed into a recession in the last year," Daley said. "Some people think it's a depression."

Daley says he will have to lay off more than 900 city workers and eliminate nearly 1,350 vacant jobs.

"These are tough times for everyone. Working together we [can], no, we will get through them," Daley said.

The City Council Chambers was packed with department heads and other employees bracing for cuts in each area of city government. The mayor repeated his call for layoffs, better management, and his proposal that all employees take three unpaid furlough days.

Only police officers, firefighters and a small number of 911 operators will be on duty the day after Thanksgiving, Christmas Eve and New Year's Eve, along with a skeletal crew in the Streets and Sanitation, Water, Aviation and Family Services departments. If the city is hit by a snowstorm or other disaster, employees will be called back in.

Daley said city employees who get to keep their jobs had better do the work.

"We will continue our efforts to reduce overtime, which is an ongoing challenge as we work to balance the need to provide services with the need to cut spending," Daley said, "and I want to remind every city employee – the vast majority who respect the taxpayers of Chicago – that they are expected to do a day's work for a day's pay. Anything less is grounds for dismissal."

Last week, the city Inspector General's office released a report indicating that city Department of Streets and Sanitation employees were wasting several hours a day sitting in their cars or otherwise not working while on the clock.

Among the other plans in the budget proposal are:
-- 929 lay offs spread across all city departments.
-- 1,346 vacant city jobs eliminated.
-- $3 tax on downtown parking fees that cost more than $12, up from $2.25.
-- Install more red-light cameras.
-- Offer sponsorships for city assets and events to raise $2 million.
-- Double Chicago Public Library overdue fines.
-- Increase tax on sporting event tickets from 8 percent to 9 percent.
-- Increase tax on smaller live music and theater shows from 4 percent to 5 percent.

The mayor says the proposed three-day shutdown alone will save $20 million.

Some union leaders promised a court fight claiming Daley does not have the power unilaterally to furlough their employees for three days. They are also preparing for a public relations battle.

"When you see $35 million being spent on public relations, consultancies," said Roberta Lynch, AFSCME union official. "We think that kind of money is really not appropriate."

Ironically, the idea of a holiday shutdown originated with organized labor, said Chicago Federation of Labor President Dennis Gannon.

The idea "didn't go anywhere because they couldn't give us any guarantees on the other side. The furloughs were always open-ended and so were the layoffs," he said.

The laborers contract says employees must work the day before and after a holiday to get paid for the holiday itself, so three shutdown days could cost laborers six days of pay.

Sources said Daley will waive that provision and pay employees for holidays. That was not enough to satisfy Lou Phillips, business manager of Laborers Union Local 1001. "It's a backdoor furlough…members are losing money. It's not their fault," he said.

With no garbage pick-ups the day after Thanksgiving, he warned of a stink: "It's going to be a lot of turkey hides [rotting away] in the alley."

The Chicagoland Chamber of Commerce spoke approvingly of the budget in a statement.

"We commend Mayor Richard M. Daley for proposing a budget that generally recognizes the financial difficulties facing businesses and homeowners alike, and focuses on more efficient ways for the city to operate during these tough economic times," said chamber president and chief executive officer Jerry Roper. "While we are concerned about the human and practical effect of city worker layoffs, we believe that the proposed streamlining and reorganization of city government is long overdue."

And the mayor believes times are not going to get easier anytime soon. He's predicting giant blotches of red ink, deficits of $200 million or more, in city budgets all the way into 2012.

CBS 2's Joanie Lum, Mike Flannery, Mike Parker and the STNG Wire contributed to this report.

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