credit: scmikeburtonIt isn’t just individual homeowners who have been impacted by the real estate downturn; city governments are also facing economic problems as a result of the housing slump. The city of Chicago has discovered that their projected incoming tax budget isn’t as high as they expected as a direct result of decreased real estate market activity.
Cities that aren’t paying attention to this problem may find themselves faced with serious economic issues resulting from recession. Chicago is hoping to head off that problem by immediately reducing government spending so that the outflow of city cash is more proportional to the true income that the city receives from property taxes and other resources.
Chicago’s stated goal is to reduce the city’s spending by a whopping $20 million to account for the losses they’ve taken in the last year. Unfortunately, this decision ultimately means more economic trouble for certain individuals within the city. In order to meet this goal, Chicago has to institute a hiring freeze and a no-overtime rule which is going to reduce the paychecks of some city employees.
The budget cuts are also likely to create a situation in which employees are overworked during the time that they are at the office. Despite this, Chicago officials believe that this is the most effective method of dealing with the decreased budget they are now working with. The hope is that the city will be able to increase its spending as the real estate market regains its strength.