CHICAGO (CBS) — Mayor Rahm Emanuel said Friday the city is facing a $635.7 million shortfall for its budget next year, and it is time to address the city’s structural deficit.

Rather than just focusing on the coming year, Emanuel says his budget team looked back 10 years to examine the city’s financial health. The findings weren’t happy news.

“Obviously, we’ll present a balanced budget,” Emanuel said. “But looking back over 10 years, what this shows is that the City of Chicago, every year since 2001, has run a deficit. So in good times and bad, regardless of the economic conditions, Chicago has had a shortfall.”

LISTEN: Newsradio 780’s Nancy Harty reports

In light of the information, Emanuel said in developing the budget, his administration will “fundamentally start to deal with the structural challenges facing the city’s fiscal health.”

“That set of choices has been avoided for the last decade, hoping a) an economic recovery would take care of the problem, or b) pushing off that set of choices we have to make, or c) using one-time fixes to get you through the year,” Emanuel said. “I will not do that. We have come to that moment of truth as a city. We now must make tough choices to deal with that in a structural and fundamental way.”

In addition to looking back 10 years, Emanuel’s budget team also looked forward three years. They concluded that if structural changes are not made, the deficit will worsen in 2013 and 2014, Emanuel’s office said.

Emanuel said he would not raise taxes with city government in the state that it is in.

“The taxpayers, as we all know, feel nickeled and dimed as it relates to taxes,” Emanuel said, “and I will not ask them to pay more for an inefficient government that is not delivering services on a more cost-effective basis.”

Retired Mayor Richard M. Daley was criticized for “one-time fixes” for the budget, such as instituting furlough days for city employees. But most notorious was the $1.16 billion parking meter lease in 2008, which is in effect for 75 years, but which was used in large part to plug the budget gap in 2010.

Emanuel said this would not be acceptable in his administration.

“We won’t dip into reserves that are used as rainy day funds to balance the budget,” he said.

The city also will not take police officers off the street, Emanuel added.

Instead, Emanuel said, the city will live by the strategy of “cut and invest.”

With that in mind, city departments are “understanding to cut the bureaucracy, understanding to cut the central office, understanding that we have to cut middle management and senior management, and invest in the priorities that have long-term benefit to the city’s economic future.”

Emanuel also announced the launch of, a new interactive Web site in which Chicagoans can submit ideas and discuss solutions for the budget. As has been the case in past administrations, Emanuel and city department heads will hold public hearings on the budget in various parts of the city.

Emanuel will present his budget plan to the City Council in October.

Watch & Listen LIVE