Preckwinkle says no new taxes next year, even as soda tax begins July 1

June 23--Cook County Board President Toni Preckwinkle is making good on her pledge not to raise taxes next year, an election-year budget move that's easier because a controversial soda pop tax already is set to take effect July 1.

Preckwinkle said Thursday that a 2018 budget shortfall estimated at nearly $98 million would be bridged by cutting costs, including possible layoffs.

"Everything is on the table, except taxes," Preckwinkle said.

That outlook came as part of the annual county budget forecast, which kicks off the financial planning process for the coming year. Preckwinkle presented the figure just nine days before county shoppers start getting hit with a new penny-an-ounce tax on sugar- and artificially sweetened beverages.

The county reduced its estimate on how much it expects that tax to bring in to $67.5 million from $73 million for this budget year, when four months worth of receipts will be collected. Next year, the county predicts the tax will bring in $200.6 million, down from $218 million.

Preckwinkle's team revised its figures after determining the county cannot collect the new tax from people who are on the Supplemental Nutrition Assistance Program, and looking at Berkeley, Calif., and Philadelphia, both of which found that similar taxes drove down consumption more than expected.

But the lowered pop tax estimate is not the primary driver of the projected budget shortfall. In addition, the county expects increased health care costs and rising personnel costs, with government workers continuing to receive raises of 3 percent or more. Other factors include higher debt costs put in motion before Preckwinkle took office, anticipated higher legal settlement costs and a decision to pay for new equipment at a county health facility without borrowing.

The employee raises, which Preckwinkle and county commissioners approved as part of new contracts, exceed the rate of inflation. Asked about that, Preckwinkle said she expects the increases to be lower in the next round of contracts that are now being negotiated.

"We've made it clear to our workforce that this is going to be an extremely challenging period, and I don't think there's an expectation on either side of the table that those kinds of increases will be repeated in this bargaining session," Preckwinkle said.

Although the $98 million budget gap might seem large, it is a relatively small fraction of the county's expected 2018 day-to-day operating costs of $3.7 billion, which represents an increase of about $220 million from the current spending plan. The Preckwinkle administration said that $220 million increase largely results from the decision to not borrow for the new health care equipment.

And it's also the smallest gap since Preckwinkle's first budget in 2011, when the shortfall was $487 million. Since then, she's cut the size of the county workforce by 10 percent and overall debt by 11 percent.

"We've gotten better at managing and being more efficient, but the problem is that the more efficient you become, the harder it is to close the gaps that follow," Preckwinkle said. "You've already picked all the low-hanging fruit."

There's also a big uncertainty looming over county financial planning, which could have an effect over the next few years. That's the prospect that the federal government will overturn the Affordable Care Act, which provides hundreds of millions of dollars to the county's vast public health system.

"Half a million people get health care coverage in Cook County as a result of the Affordable Care Act, most of them through Medicaid expansion," she said. "If they eliminate Medicaid expansion, those people lose their health care coverage, which I think is a nightmare for them and is terrible financially for the county as well."

Preckwinkle, who recently announced she will run for a third and final term next year, will present her full budget proposal in October.

hdardick@chicagotribune.com

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