CHICAGO, Oct 26 (Reuters) - A proposed $2.9 billion fiscal 2013 operating budget for Cook County, Illinois, takes steps to address significant financial challenges, however a big pension problem is looming, a government finance watchdog group said on Friday.
The Chicago-based Civic Federation said the budget unveiled by County Board President Toni Preckwinkle last week tackles a $267.5 million shortfall with spending cuts, revenue enhancements and expanded Medicaid funding, while keeping the property tax levy nearly flat and phasing out a sales tax hike enacted in 2008.
"These spending cuts, together with initiatives like performance management and managed competition, are making Cook County government a more efficient and accountable steward of public resources," said Civic Federation President Laurence Msall in a statement.
The county is still projecting growing structural deficits in the future as healthcare and personnel costs are expected to rise and revenue is projected to fall, the group said.
Also, the funded rate for the county's public pensions dropped to 57.5 percent in fiscal 2011 from 74.7 percent in fiscal 2002 due mainly to insufficient investment returns and employer contributions, according to the Civic Federation. A funded rate of 80 percent is generally considered healthy.
"The county's pension fund has not yet reached the tipping point of financial peril but it will be soon without action," said Msall.
Preckwinkle's budget, which is awaiting a vote by the Cook County Board of Commissioners, included a tax of 5 cents per bullet and $25 on each firearm sold to generate an estimated $1 million to defray healthcare expenses associated with gun violence.
The spending plan for the nation's third most populous county also takes on smoking and gambling by calling for a $1 increase in the county's current $2 per pack cigarette tax to raise $25.6 million and an annual $800 per year tax on video gambling machines to generate $1.3 million.
Preckwinkle also proposed a 1.25 percent use tax on major purchases of goods outside of Cook County by county residents and businesses that is expected to bring in $15 million for the budget.