April 19, 2010

Mayor Daley Announces Steps To Save $13 Million In City Budget

Also Challenges All City Vendors to Negotiate 10% Cut in Spending on Their Contracts
Mayor's Press Office    312.744.3334

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Mayor Richard M. Daley today announced steps that will save $13 million in the current City budget and said the city would challenge all city vendors to re-negotiate their contracts with the hope of cutting spending on them by 10 percent, which could save millions more.

“Whether in good times or bad, I've made it a priority to improve the way we manage government so that we're doing more with less to protect our taxpayers. But, we must do more,” Daley said in a news conference held at City Hall.

"We hope that our vendors will understand that the bad economy demands we take real action to cut spending, including them. This means that we're going to ask vendors to revisit with us the scope of their agreements to determine whether their contracts can be renegotiated," Daley said.

The current City budget did not include an increase in the property tax and did not include any new tax, fine or fee increase or any new tax, fee or fine of any kind.

The steps announced today are:

  • The Department of Procurement Services or Departments will meet with city vendors asking them to renegotiate contracts to achieve a 10 percent reduction in the value of their contract.

    The 10 percent number was arrived at because many city employees, starting with the Mayor, are taking a pay cut of almost that size this year. A similar vendor initiative in May, 2009, resulted in 30 percent of City vendors agreeing to a 2 percent reduction in their contracts, which saved almost $4 million. 

  • The Department of General Services recently took advantage of natural gas market conditions and locked in a savings of $8 million for the remainder of 2010. The price of natural gas has remained low as a result of the continuing recession and a winter that was warmer than last year. The City had been paying 65 cents per therm and now is paying 54 cents. The 2010 total natural gas budget for the City is $45.2 million across for more than 400 facilities.  
  • The Department of Finance recently utilized low-interest Build America Bonds and Recovery Zone Bonds, which were created through the American Recovery and Reinvestment Act of 2009, to finance various City capital improvement projects. The use of these bonds, instead of selling traditional tax-exempt bonds, will result in more than $2.8 million in debt service savings this year.  
  • From January through March the Department of Fleet Management returned 32 rented vehicles for a savings of $1.7 million for the rest of 2010 with no negative impact on service delivery.
    This was accomplished by reviewing usage data such as fuel, mileage and hour meter information. Further review of city-owned and leased vehicles continues, with another savings announcement expected by the end of June.  
  • The City will stretch out its timetable for increasing the mix ratio in the bio-diesel fuel its uses in vehicles at a savings of about $200,000. Chicago already meets the state standards.  
  • The Department of General Services has begun a pilot program to reduce custodial services at City Hall for floors 4 through 11. Under the program, the offices will receive services every other day instead of every day, at a savings of up to $100,000.  
  • The City will conduct another of its periodic audits of cell phones and other mobile communication devices to ensure the most efficient use of this equipment. The expected savings is $50,000.  
  • The City also will conduct an audit of the parking of vehicles in public garages downtown. The possible savings are estimated at $50,000.

Daley said today’s measures build on steps announced in the last two weeks aimed at reducing the cost of government. They included:

  • An audit of the City’s healthcare benefits system to help ensure that ineligible individuals are not being covered; and
  • Strengthening City policies for managing employees who have been injured while on duty.

“The bottom line remains that although we are cautiously hopeful that some revenues will begin to recover, we cannot expect revenues to rebound to 2007 levels for awhile. In the meantime, we must remain creative and deliver on our commitment to better manage government and do more with less,” Daley said.

"The steps I have announced today do exactly that and there will be far more steps we'll take that I will announce in the coming weeks and months so that we continue to get ahead of things,” he said.

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