Mayor Richard Daley on Wednesday acknowledged that fallout from last week's terrorists attacks is already rippling through the local economy and could force him to consider raising taxes or fees to balance the city's 2002 budget.
At the same time, Gov. George Ryan warned that leaner days could be coming if nothing is done to staunch the rapid hemorrhaging of the state's $23.7 billion tourism industry, hit by an alarming drop in business that began immediately after the attacks on the World Trade Center and Pentagon.
Ryan urged Congress and the Bush administration to swiftly pass an aid package to buoy the airline industry, telling reporters at an afternoon news conference that the outlook for the state's convention and hotel business appears bleak if the airlines aren't given help fast.
"We must not allow the terrorists to win by allowing them to cripple a critical industry," said Ryan. "Can you imagine McCormick Place shows being empty? Can you imagine hotels that aren't filled? Restaurants that aren't filled because we can't bring people in because we haven't got an airline that's up and running?"
Already, the American Society of Microbiology has postponed until mid-December a conference of 15,000 microbiologists that had been scheduled for this weekend at McCormick Place. Jim Sliwa, a spokesman for the society, blamed concerns about air travel for the delay.
The McCormick Place Hyatt has lost $1.2 million in revenue since the day of the attacks and has seen occupancy rates dip into the single digits, said the hotel's general manager, Jerry Simmons. Scott Miller, president and CEO of the Hyatt Hotels Corp., said the chain has dramatically cut back work hours for its employees, adding that layoffs are in the offing if the crisis doesn't improve.
Meanwhile, Ryan aides were monitoring economic developments for possible impacts on the state budget.
Slow revenue growth had been factored into the fiscal 2002 spending plan, but a long-term economic downturn stemming from the attacks was not, said Stephen Schnorf, Ryan's budget director.
"We are going to be watching the state's revenues very, very closely over the next several weeks," Schnorf said, adding that the economy may perform a little worse than expected in the short term but should rebound.
The fiscal cloud hanging over the state comes just a year after legislators temporarily suspended the state tax on gasoline and, on another front, sent rebate checks to Illinois taxpayers.
In Chicago, Daley faces the potential for increased expenses for such things as security and employee overtime even as revenues--from the hotel tax to the sales tax--could take a hit as Americans travel less and take steps to hunker down financially.
"We are evaluating," he told reporters. "We are looking at everything."
When preliminary budget projections were released July 30, administration officials said that the chances of any increased costs to taxpayers were slim, but the mayor hedged on Wednesday.
"I don't know," he said. "We are sitting down with the budget [department] and they are making their estimates. They are sitting down with the Federal Reserve and the economists."
The possibility of higher city levies next year comes as many Chicago homeowners are bracing for property tax bills expected to reach their mailboxes by month's end. Many are expected to face steep increases, in part because of zooming values in some neighborhoods and a recent reassessment of the city.
On another front, officials with the Chicago Park District and Chicago Bears said the Soldier Field redevelopment project was not in danger, though the bonds that will finance the $606 million project are to be retired with a portion of the proceeds of the hotel tax collected in Chicago.
Bears President Ted Phillips acknowledged that vacancies may increase in the short term, but he said that assumptions about the amount of money that would be generated by the tax to pay off the bonds are "extremely conservative."
"We are very confident the hotel tax will be very sufficient to repay," Phillips said. Plans still call for the start of construction immediately after this season.
The city's portion of the hotel tax is projected to produce about $42 million this year. But the most recent collection figures suggest that the slowing economy was taking its toll even before last week's tragic events.
In July and August, total hotel tax revenues dropped nearly 6 percent from year-earlier totals.
Though it is far too early to determine the depth and length of the economic effects stemming from last week's tragic events, other city revenue streams also could be affected. If consumer spending slowed, for example, it would affect sales tax revenues. Sales taxes this year are expected to provide the city with about $248 million.
And layoffs could affect the city's portion of the state income tax, which is projected to yield about $219 million this year.
Jim Reilly, chief executive officer of the Chicago Convention and Tourism Bureau, said wholesale layoffs in the hotel industry alone could devastate Chicago's economy, where one out of every 10 people work in jobs related to travel or tourism.
"If we don't keep the airlines going, we are in deep trouble, and I don't just mean us," Reilly said. "I mean everyone in this economy."
Meanwhile, city officials expect to keep a sharp eye on the volume of passenger ticket taxes collected at Chicago's two major airports. The tax revenues, which last year totaled $100 million at O'Hare International Airport alone, are used to pay off bonds that have financed airport capital projects and soundproofing of nearby homes and schools.Copyright © 2015, Los Angeles Times