Cook County government could suffer at least a $200 million budget shortfall this year due to lost tax revenue amid the coronavirus pandemic, according to a Friday projection.
Starting in May, Cook County’s forecast net revenue is expected to begin dropping and spark a substantial budget gap for the 2020 fiscal year, according to a projection from Chief Financial Officer Ammar Rizki. Plummeting sales tax revenue from restaurants and other sources could spell long-term damage to the budget as shopping and tourism numbers deflate amid the COVID-19 outbreak.
Rizki said his “best-case scenario” projection is if the statewide stay-at-home order ends as scheduled at the end of May, but the projections could fluctuate greatly.
“If we’re not able to control the pandemic and the economy is in some sort of a suspended state through the summer months,” Rizki said, “this is going to get only worse for us.”
Rizki said he fears the coronavirus’s clampdown on outside life will not ease once the virus subsides, and warned that “people are not going to go rush out automatically and start living their daily lives that they used to prior to COVID, despite the pent-up demand.”
Illinois restaurants are currently shut down except for carryout and delivery orders, bars and clubs have closed their doors, and a slew of concerts and other summer mainstays are canceled. The usual flush of tourists in downtown Chicago has evaporated, hurting home-rule tax revenues on hotels.
Separate from the $200 million drop in tax revenue, Cook County Health and Hospital System, which operates Stroger and Provident hospitals, also has been seeing financial damage.
A 43% decline in patient fees was reported since mid-March, and the system is expected to lose about $60 million to $75 million from such revenues should the coronavirus’s economic pressure last through June. Much of the dramatic impact is from restrictions on elective surgeries due to the high influx of COVID-19 patients, although Gov. J.B. Pritzker will allow some soon.
On Friday, Cook County received $429 million under the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act passed in March. But the money only goes toward direct COVID-19 expenses outside the budget, not lost revenue from taxes and county hospitals. Any funds not used by the end of the year must be returned.
County Board President Toni Preckwinkle said she hopes the federal government will come through with more financial help. She is working with the National Association of Counties and other stakeholders to lobby the federal government to apply the $429 million to lost revenue.
“That’s going to be a critical issue for our cities, towns and villages and for the counties,” Preckwinkle said. “If we can use the CARES Act money for lost revenue, that will put us in a quite different place than if it’s not accessible to us.”
The $200 million gap comes despite current savings in office expenditures such as electricity, as nearly all of the county’s employees are working from home.
Preckwinkle also rebuffed U.S. Senate Majority Leader Mitch McConnell’s suggestion Wednesday that states should consider bankruptcy if they are buckling under budget shortfalls.
“The senator is extremely ill-advised,” Preckwinkle said of the Kentucky Republican. “It’s an extraordinary and extremely risky step to take for government, and the dismissive way in which he’s addressed this is insulting to all of us.”
