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Economic Worries Might Complicate City Budget Woes

Mayor Rahm Emanuel

Mayor Rahm Emanuel (Credit: CBS)

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CHICAGO (CBS) – Questions about the economy constitute a new threat to Chicago’s already shaky financial picture.

As CBS 2 Chief Correspondent Jay Levine reports, Mayor Rahm Emanuel has been working on the city’s 2012 budget, trying to figure out how to eliminate a $600 million deficit.

Emanuel said it’s too soon to tell if the latest concerns about the economy would make the deficit even worse.

But the bottom line is that revenue from taxes, fines and other sources must equal expenses for the budget to be balanced. If revenues are down because people aren’t spending money, aren’t buying and selling homes, and watching property values – and, therefore property taxes drop – you are in a world of trouble.

The mayor has been trying to boost revenue by growing the economy – with new jobs for Chicagoans.

The brand new Chase Bank branch in Portage Park is one of four new neighborhood banks that JP Morgan Chase is opening in Chicago, part of 400 new jobs announced Tuesday by a company committed to Chicago,

“These 400 jobs are a part of that growth and really, I think, demonstrate a return to confidence after the financial crisis of 2008,” JP Morgan Chase Midwest Chairman Glenn Tilton said.

On Monday, the Dow Jones was down more than 600 points at the closing bell, the worst crash since 2008, when Bennett Johnson was the city’s budget director.

“Back then, in actuality, things went down approximately 15 to 20 percent. We expected only a 10 percent decrease,” Johnson said. That forced the city to impose layoffs to balance the budget.

Asked if that could happen again in the wake of Monday’s stock market crash, Johnson said, “It certainly could.”

Emanuel said that he got an update on the city’s revenues last week, “but that’s something that’s not static but is constantly updated.”

He said that revenue picture will be boosted by all the new jobs.

“The jobs are positive, but it’s also this issue of, you know, that company is investing here in Chicago and that’s really what you wanna hear, and that’s really what you need,” Johnson said.

The stock markets rebounded on Tuesday, with the Dow Jones up more than 400 points at closing, which might have eased some of the fears. But the wild swings of the past few days add uncertainty to the city’s revenue picture at a time Emanuel’s budget team is already struggling to cut expenses.