September 24, 2007
FOR IMMEDIATE RELEASE

For more information, contact Ibis Antongiorgi, Press Secretary to Cook County Board President Todd H. Stroger, at 312-603-0396 or by email at iantongiorgi@cookcountygov.com.

Experts: Cook County Deficit Driven by Structural Shortfall in Revenue from Federal, Other Sources  

September September 24, 2007 – The Center for Tax and Budget Accountability – the CTBA – has issued a report this week that concludes that Cook County’s revenue system is structurally unable to support the essential public services it is tasked to provide.
 
The CTBA analyzed Cook County's entire fiscal system, focusing specifically on the ability of the County's revenue base to keep up with the inflationary costs alone of providing public services. The report's principal finding is that the County's annual revenue growth falls far short of annual expenditure growth, taking into account only inflation and holding public services at 2007 levels into the future.
 
The report notes that state and local governments across the United States are facing significant fiscal challenges, particularly the fact that the cost of public services provided by local governments is growing at a rate greater than local revenues, resulting in expanding annual deficits. The primary culprit in this dynamic is the cost of health care, which is increasing more than three times more quickly than the general inflation rate.
 
Public health care providers like Cook County have seen demand for their services grow at the same time that cuts in the federal Medicaid program have resulted in the loss of millions from the pool of health care dollars nationally, say the report’s authors, Heather O’Donnell and Ralph Martire. According to their research, federal Medicaid cuts cost Cook County $139 million between 2005 and 2007. At the same time, employer-sponsored health care coverage has declined and public safety- net providers like Cook County are filling the gap. For example, visits to the network of Cook County hospitals and clinics increased by nearly 200,000 in fiscal year 2005, and the number of prescriptions filled at the County increased by 73% between 2003 and 2005.
 
The authors note that this increase in demand has occurred during a period when Cook County’s revenue sources have remained flat or actually declined in recent years.
 
“This ongoing fiscal mismatch between revenues that underperform inflation and service costs that grow at rates above inflation has resulted in chronic annual budget deficits,” write O’Donnell and Martire.
 
The report includes a number of key findings:

• Without a significant change in either revenues or expenditures, Cook County’s structural deficit – the gap between the cost of preserving current services and the annual revenue the County actually collects to pay for those services – will continue to grow over time.
• The County’s structural deficit has contributed substantially to its total deficit for FY 2008, which the reports authors estimate to be $288 million. Without additional revenue, that total deficit is expected to rise to $568 million in 2010, $808 million in five years (2012), and to $1.5 billion in a decade (2017). The FY 2008 estimate does not include cost of living increases approved by the County board earlier this summer, according to Heather O’Donnell.
• While the cost of providing public services increases annually with inflation – roughly 7.5% for health care and 2.5% for other services – Cook County’s revenue is projected to grow at a rate of only one-half of one percent per year.
• Cook County’s revenue system is fundamentally flawed – that is, most of its revenue sources do not grow with the economy while costs do.
• Federal Medicaid dollars, which fund 16% of the County’s total operating budget and 51% of the County’s health care system, declined by $139 million between 2005 and 2007 – a number that is expected to top an additional $500 million between 2008 and 2012.
• Flaws in Cook County’s Medicaid and Medicare billing practices inhibit the County’s ability to recover all federal and state funds to which it is entitled. At the same time, nearly half of patients in the system do not qualify or are not enrolled in Medicaid or Medicare and have no private health care coverage – leaving the vast majority of the care provided by Cook County unreimbursed.
• Unless Cook County undertakes fundamental fiscal reform that ensures that its revenue sources grow with the economy and the pace of inflation, it cannot sustain current levels of service.

The report did not take into account the increasing financial pressures on the County’s public health system from a spike in the number of uninsured low- and moderate-income families.
 
The Center for Tax and Budget Accountability is a non-profit, independent research and advocacy think tank committed to ensuring that tax, spending and economic policies are fair and just and promote opportunities for everyone, regardless of economic or social status. Cook County Board President Todd H. Stroger commissioned the Center to produce this analysis in the wake of last year’s severe budget deficit, as a way to develop strategies to tackle what is anticipated to be a persistant and significant deficit for FY 2008 and the coming years, as well.
 
CTBA's mission is three-fold: to identify and analyze issues; develop policy options; and promote fair, efficient and progressive tax, spending and economic policies that improve the well-being of low and moderate income families in Illinois.
 
Cook County is the 19th largest unit of government in the nation representing more than five million residents in 128 municipalities and 30 townships. The County is the largest provider of indigent health care in the state and the third largest provider of such care in the nation.
 
Like other local governments, Cook County uses a mix of revenue sources to fund public services, including sales taxes, cigarette taxes, a variety of fees for specific services delivered, and a property tax levy which has been frozen for the last ten years, effectively losing 23% of its value since 1997.

For more information, contact Ibis Antongiorgi, Press Secretary to Cook County Board President Todd H. Stroger, at 312-603-0396 or iantongiorgi@cookcountygov.com. 

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