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Chicago mayor to lay off workers to plug budget gap

Emanuel answers a question during his first news conference as mayor elect in Chicago
Emanuel answers a question during his first news conference as mayor elect in Chicago

CHICAGO (Reuters) - With Chicago still facing a lingering deficit in its current budget, Mayor Rahm Emanuel unveiled on Friday a series of steps that will lead to up to 625 layoffs.

The steps include the privatization of custodial services at city libraries and airports, benefits services and the water billing call center. In addition, about 126 seasonal workers in Chicago's transportation department would be discharged, resulting in a drop in curb, gutter and sidewalk improvements this year.

"Today I'm taking steps because I cannot wish away this budget shortfall," the mayor told reporters.

Earlier this month, Emanuel said he would eliminate $20 million of the $31 million budget gap by not filling up to 200 positions and partnering the city's public health department with federally qualified community health centers.

But he left the remaining $11 million up to city worker unions.

On Friday, the mayor released nine work-rule changes he said he proposed to unions. The changes, which would collectively save the city about $19 million, while preventing layoffs, have not been agreed to by the unions, according to the mayor.

Officials at the Chicago Federation of Labor and the American Federation of State, County and Municipal Employees were not immediately available for comment.

Emanuel said he continues to be open to any cost-saving ideas the unions might have.

"I asked labor to be my partner and I continue to ask labor to be my partner," he said.

The $3.26 billion corporate fund budget assumed savings from unpaid employee furlough days for the entire fiscal year, which ends December 31. But the union agreement over furloughs ended on June 30, leading to the $31 million gap.

Emanuel must soon put together a fiscal 2012 budget, which is facing an even more daunting deficit projected at $700 million.

Like other U.S. cities, Chicago's revenue tanked due to the recession, while the housing market's collapse eroded property values and depressed real estate transaction tax collections.

The use of one-time measures that have exacerbated Chicago's structural budget imbalance led to downgrades of the city's debt ratings last year.

(Reporting by Karen Pierog; Editing by Jan Paschal and Leslie Adler)

(This story is corrected in the 6th paragraph, City of Chicago corrects to say that savings is $19 million, not $18 million)

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