ROBERT SIEGEL, host: From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.
MICHELE NORRIS, host: And I'm Michele Norris.
In Washington, congressional leaders and the White House are locked in a bruising fight over the debt ceiling. But outside the Beltway, in cities large and small, mayors are grappling with their own economic challenges. Over the next several days, NPR will check in on mayors of some of those cities to hear how they're coping. And we begin in Chicago, where Mayor Rahm Emanuel, two months into the job, is battling city unions to close a massive budget gap.
NPR's Cheryl Corley has the story.
CHERYL CORLEY: Mayor Rahm Emanuel, fresh from his second stint as a White House adviser, is no stranger to tough negotiations. And that's where he finds himself now. The mayor's predecessor, Richard Daley, left Emanuel a daunting financial hole to dig the city out of. Chicago faces a $600 million budget gap next year, not to mention the one this year.
As part of the solution, Emanuel decided that more than 600 city workers should be laid off.
Mayor RAHM EMANUEL: My duty as mayor is to protect our city's taxpayers and be their voice, not to protect the city's payroll.
CORLEY: And the fight was on. This week, union leaders said if Emanuel wants to cut jobs, maybe he should look to middle managers who fill the offices of city hall.
JORGE RAMIREZ: We think before you outsource anything, or before you look to cut anything or look for anything else from your workers, you should at least be managing the city in a way that taxpayers really demand - and that's efficiently as possible.
CORLEY: That's Jorge Ramirez, the head of the Chicago Federation of Labor, one of two umbrella groups representing about 8,000 city workers.
Under the budget created by Daley, city workers agreed to several furlough days in order to prevent layoffs. But that concession expired in June, and Daley did not negotiate an extension before leaving office.
In his press conference, Emanuel shot back at the union leaders.
EMANUEL: No part of the budget - any part of the budget - from the mayor's office to work rule reforms, and everything between those boundaries is not off limits, it's on limits.
CORLEY: Meaning everything is on the table. While the mayor was clearly miffed, this was not a raucous Chicago-style smackdown - not yet. Things are still fairly civil, actually, but maybe not for long. Roosevelt University analyst Paul Green says Emanuel was elected with 55 percent of the vote in part because of his reputation for making tough decisions. And he says when it comes to Chicago's deficit, Emanuel may have to stop negotiating and make some tough calls.
PAUL GREEN: Compromise is not going to get him to where he needs to go. He's got to take some really hard positions eventually, and I think he's going to be dealing with a lot of angry people. There is no way to sugarcoat this. There are really difficult budget choices to be made, and you can't finesse it.
CORLEY: Like many other cities, the recession dealt Chicago a harsh blow, one for which it wasn't prepared. Laurence Msall is president of the Civic Federation, a local government watchdog group.
LAURENCE MSALL: Chicago entered the Great Recession with no reserves, with a operating deficit, and with no long-term plan on how to get through this financial challenge.
CORLEY: A challenge that's expected to add up to a massive 600 to $700 million deficit next year. Msall says Emanuel is on the right track. He used an executive order to create a long-range financial planning process, and the budget is one of his top priorities. For the past couple of weeks, the mayor has held press conferences - showcases of sorts - to detail how the city is working to shave costs.
Good morning and welcome to the Jardine Water Filtration Plant...
At this meeting at one of Chicago's water filtration plants, department heads talked about how they're changing business-as-usual procedures. Water department officials said instead of tearing up streets to repair sewers, they'll install more liners that extend the life of the city's sewers. Two other departments plan to merge. And the city will reduce the size of its vehicle fleet and install Zipcar technology so workers share cars.
Emanuel says the group came up with initiatives to save $14 million.
EMANUEL: I asked everybody, like we're doing, is to go through the budgets, not get stuck to old ways, but ask some fundamental questions, going line by line, which is, is this the best way to deliver this service?
CORLEY: Labor leaders say the efficiency report they've offered Mayor Emanuel could save Chicago as much as $242 million. It's a familiar theme: Dueling ideas about what to cut and how.
Cheryl Corley, NPR News, Chicago.
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