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CCFB News» August 2020

Manifolds, Manolos and Manure

08/01/2020 @ 11:00 am | By Bona Heinsohn, CAE

During the early stage of sheltering in place, I subbed in as my blue-eyed girl’s math teacher. A wildly poor substitute. One of her projects was an online escape room. To escape she had to find the partial products of a long multiplication problem. I had to google what partial products were. It was the first and last time she asked for help with math.

 

Math isn’t my subject. I struggled through college calculus. Was fine-ish in college statistics. Weaseled my way out of graduate level statistics. And have avoided math classes ever since.

 

However, even I can figure out that COVID-19 and the earlier shutdown will have an impact on local governments’ budgets. Heck, it impacted our personal budget. Our grocery spending went through the roof. We bought iced tea bags and liters of root beer rather than visiting the local drive thru. Our gas spending plummeted. And I haven’t even dared to look at our internet usage.

 

Even our small-town budget took a hit. People weren’t traveling. Shopping. Buying gas. And our county, like many others, offered a grace period for payment of property taxes.

 

Take Cook County for example, officials are anticipating as much as a $220 million shortfall for this budget year. The county’s largest revenue source is its infamous one percent sales tax. Reductions in sales, amusement, county use, and hotel accommodation taxes coupled with increased spending on overtime, personal protective equipment, and sanitation has created the perfect proverbial budget storm.  

 

The Cook County budget also houses the county-run health system. Early estimates indicate that the health system will be $60 to $75 million short. Like other hospitals, the system shutdown money-making elective surgeries at its two public hospitals to keep beds open for COVID-19 patients.

 

In an effort to correct the immediate shortfall, county agencies and offices have been directed to develop new, leaner approaches to fulfilling their core responsibilities. The county has also reduced contracts and employee positions while also relying on federal emergency dollars. Toni Preckwinkle’s office has also implemented a six-and-half percent holdback for certain offices and officials.

 

Officials are anticipating a nearly $300 million revenue gap for next year’s budget. It’s like preparing to build a house while the foundation is literally crumbling. It’s unclear if the estimated revenue gap accounts for a potential resurgence of COVID-19 in the fall or even the full impact of the COVID-19 pandemic.

 

In Chicago, COVID-19 is having a similar impact on an already precariously balanced budget. Like the county, Chicago’s revenue sources have essentially dried up. McCormick Place’s convention business is all but disappeared as conferences have been cancelled. Not as many people are flying, traveling, or visiting area attractions. Like Preckwinkle, Mayor Lightfoot is using the funds from refinancing debt, holding off on some projects, and reevaluating open positions to temporarily fill the gap.

 

Even to a non-math person, it’s evident that in light of COVID-19 local governments need to rethink their budgets and be prepared for an extended impact from the pandemic. Perhaps this new way of thinking will continue, and governments will embrace leaner approaches to fulfilling their core responsibilities.

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