County braces for $200 million revenue gap from COVID-19 — and prepares for ‘how bad this could get’

The coronavirus pandemic has blown a hole in the Cook County budget, with preliminary outlooks projecting a shortfall of $200 million.

That hole is largely due to decreased revenue from the county’s sales tax and other home rule taxes, such as the hotel accommodations tax.

But no one knows the depth of that hole and how long it will take to fill it.

“We’re not going to get a handle on this until we have a vaccine, and that’s a minimum of 18 months away,” Cook County Board President Toni Preckwinkle said.

For the county’s general fund, which covers the sheriff’s and state’s attorney offices and others, the revenue shortfall is around $200 million. The shortfall was first reported by WBEZ.

The county’s health fund, which covers the Health and Hospital system, has a projected patient-fee revenue shortfall between $60 million and $75 million, assuming the impact lasts from March to June, said Ammar Rizki, the county’s chief financial officer.

Revenues feeding into the health fund have declined by 43%, and charges related to uninsured and insured patients have dropped by 52% and 40% respectively. Expenses related to coronavirus have increased by $25 million.

Annette Guzman, the county’s budget director, said the county is working with “each of our offices to understand what their anticipated costs are related to [coronavirus] expenditures.” Rizki said it’s “too early to tell” if the county will need to lay off employees to alleviate some of the pressure on its pocketbook.

Rich Hein/Sun-Times file

“We’ve been looking at a lot of stuff in terms of how bad this could get,” Rizki said.

“We’re really pushing to make sure that the federal government can allow us to use some of these funds for loss reimbursements. Without that we would have to look at other types of expenditure management measures, and so those are discussions that are happening right now, but everything is sort of up in the air.”

Through the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, the county has received some federal relief dollars, including $429 million that came in Friday for expenses related to the coronavirus.

That money can’t be put toward the county’s revenue losses, however.

Preckwinkle said the county is part of a national lobbying effort on behalf of local units of government to be able to use the money for lost revenue, but “it’s unclear how that’s going to play out, and that that’s going to be a critical issue for cities, towns and villages and for the counties.”

“If we can use this money, if we can use the CARES Act money for lost revenue, that will put us in a quite different place than if it’s not acceptable,” Preckwinkle said.

But if the county is unsuccessful in getting that clarification and applying the funds to lost revenue, officials would need to pay back the remainder of the funds if they’re not used for coronavirus-related expenses by the end of December, Rizki said.

Preckwinkle said if history is a guide, the virus could rage on in some form for at least two years, so the county is beginning to look at what could happen for its finances over the next two years.

“It’s not just a challenge for this year, in terms of how we use our reserves, but what we’re going to do in the next couple of years, in particular when we estimate that we’ll still be struggling with economic consequences of the pandemic,” she said.