One of the themes that came out of today's city council budget hearing—it passed unanimously—was that this year's (more) austere budget was that it's the budget that should have been passed one, two, or several budgets ago. There's some truth to that.
What had been smaller problems with running deficits exploded during the recession. But the problem has been building for awhile.
(City of Chicago 2011 Annual Financial Analysis, 2011; PDF)
Note the substantial increase in TIF bonds, from $52.5 million in 2001 to $102.5 million in 2008. And the portion of the property tax levy going to debt service has increased:
Which brings us back to our old friend, the TIF:
TIF spending spikes just as the country is sliding into recession.
Meanwhile, as reported in the Tribune, the city worker headcount continues to decline, but the actual amount of money spent on personnel services has only started to.