Daley finally comes clean about budget crisis

The Daley administration finally came clean about the magnitude of Chicago’s budget crisis and it’s a doozy: The city’s preliminary 2009 budget has a $420 million deficit that one aldermen said could require as many as 1,800 layoffs.

The problem of deeply depressed revenues tied to the housing crunch and dramatically higher expenses stemming largely from fuel and snow removal costs is so severe, Chicago ended 2007 with an unreserved balance of just $4.6 million.

That’s the lowest in recent memory and a dangerous level that threatens to impact the all-important bond rating that determines city borrowing costs. A year-end balance of $19.7 million in 2004 prompted a drop in the city’s bond rating.

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