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City budget shortfall could reach $20 million

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Evanston officials Monday night roughly doubled their estimate of how deep a budget hole the city may find itself in as a result of the COVID-19 pandemic.

From a previous estimate of $10.6 million, Interim City Manager Erika Storlie said it now appears the shortfall could reach as high as $20 million.

The city’s budget for this year forecast general fund spending of $117.2 million, so a $20 million shortfall would require reducing spending by 17 percent.

The increase in the projected shortfall, which had not been reflected in documents prepared for the meeting just a few days ago, appears to result largely from Gov. J.B. Pritzker’s decision last week to extend his stay-at-home order for another month and a lack of clarity about how soon normal economic activity may be able to resume in the city as the pandemic drags on.

Storlie and the city’s chief financial officer, Hitesh Desai, had developed a plan to reduce the budget gap by $6.4 million through a combination of a handful of layoffs, a hiring freeze, shaving non-payroll expenses by 5 percent and deferring some transfers from the general fund to other city accounts.

But that leaves a $4.2 million gap in what’s now seen as the best case scenario and a $13.6 million hole if the $20 million revenue shortfall actually happens.

Storlie says the city is in talks with its four employee unions about other possible cost savings — which could include unpaid holidays or furlough days and more layoffs.

If all city workers took 10 unpaid days off during the remainder of this year, it would save $2.3 million, Storlie said.

The city started the year with 810 budgeted full-time-equivalent employee positions, up by 16 from 2019.

At a ballpark total compensation average of $100,000 per employee, it would require laying off 136 workers, or about 17 percent of the city’s workforce, to close a $13.6 million budget gap.

A presentation about how to address the expected budget shortfall stressed using an “equity-based model” that would prioritize health and safety needs for all residents and try to determine what current services could be put on hold while focusing on the impact any changes would have on vulnerable communities.

Aldermen Monday night approved taking out a line of credit from Byline Bank to help with cash flow issues during the year. Proposed last week with a $7.5 million cap, it was increased at the meeting to $15 million as a result of the new projections of a potentially more severe budget shortfall.

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