June 11, 2021
On April 21, 2021, the City of Chicago adopted Substitute Ordinance 2020-5902, which requires the Department of Finance to publish monthly reports of Corporate Fund revenues. This amendment to the Municipal Code also requires the Department to coordinate with the City’s Office of Management and Budget to collect revenue data and produce a report comparing current revenues to budgeted revenues and the previous year revenues for the same period by category.
The ordinance instructs the Department of Finance to publish monthly reports prominently on the City’s website, although locating them requires some searching. The revenue reports can be found under “supporting information” on the City’s Office of Budget and Management webpage. So far, reports from February to April 2021 are publicly available. These reports supplement existing annual and quarterly budget reports released by the City that include expenditures as well as revenues. While the new monthly reports only include revenues in the Corporate Fund (the City’s general operating fund), the existing quarterly reports include both revenues and expenditures across all local funds (the Corporate Fund, special revenue funds and enterprise funds).
According to the sponsor, Alderman Brendan Reilly, the motivation behind releasing monthly Corporate Fund revenue reports is to more easily detect trends before they severely impact the budget. The budget gaps caused by the COVID-19 pandemic in particular caught some officials off guard. Alderman Reilly’s goal for the new reporting timeline is to give City Council members the ability to anticipate budget crises before they become harder to manage. Moody’s Investors Service praised the ordinance as a credit positive.
Due to a lag in time between when some revenues are collected and received, and potentially significant fluctuations from month to month, these monthly reports provide only a snapshot of City finances at any point in time. Adjustments may be made after each report is published in order to ensure revenues are reflected in the proper reporting period. By contrast, annual and quarterly reports are published after all revenue has been collected. The monthly reports allow the City to provide a more current picture of revenues as they are collected in real time.
The most recent report from April 2021 shows that overall year-to-date collections were above budget expectations, but several tax and non-tax revenue sources fell short of budget expectations. Many local taxes (locally-imposed taxes on consumers and businesses, such as hotel taxes, sales taxes and utility taxes) reported for the month of April were below budgeted projections. Transportation taxes were significantly below budget, by $15.0 million or 24.8%, illustrating some of the lingering revenue effects of the pandemic. Revenue from licenses, permits, fines, forfeitures and other penalties were also well below budget. However, year-to-date income tax and personal property tax revenue through April was above budget projections. As corrections and adjustments are released, the April figures may change, and as more reports are released throughout the year, this information will become more valuable over time.
The Civic Federation supports the financial reporting required through Substitute Ordinance 2020-5902. More frequent Corporate Fund revenue reports provide City Council members and the public with timely data while improving financial transparency of City operations.
These monthly reports could be improved to provide more value by including expenditure data similar to Cook County’s current practice. The process for releasing the City’s monthly reports could also be strengthened by requiring the Department of Finance to provide a brief summary of the most recent monthly report at each City Council Finance Committee meeting, as is also current practice at Cook County Finance Committee meetings. Such discussion of the reports would allow Council members to raise questions to City staff in a public forum. Flagging revenue variances early will allow City leaders to react more quickly and adapt to the often shifting post-pandemic reality.
Read the Civic Federation’s full report on the City of Chicago’s Proposed Budget for Fiscal Year 2021 here: https://www.civicfed.org/ChicagoFY2021
The Federation’s coverage of the fiscal impacts of the COVID-19 pandemic can be found here: https://www.civicfed.org/covid-19