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February 13, 2014

Why We’re Broke: #Chicago Underestimates Snow Removal Budget by $23 Million

Filed under: Economics,Politics — Chris Chaten @ 1:42 PM

Another winter day in the Chicago brings about snowstorm. Two weeks into February, the Chicago Sun Times reports that we are already over budget for snow removal.  While the mayor can claim this is due to inordinately high snowfall, it’s really due to inordinately poor planning.

Here’s how we came to a budget this year: we took last year’s number, $20.5 million, and stuck that in for this year.

Why is that ridiculous? 2013 was the lowest in recent memory for snowfall at 19.6 inches.

Take a look at annual snowfall in Chicago:

The red line is the budget. The black line is the expected.

The budget is set for a level of snowfall that’s all but unprecedented. It’s so low, it undercuts the estimate of 41.6 inch by more than 50%. Taking the current rate per inch, the budget should have been $43.5 million – or $23 million more than budgeted.1

1 There’s a bit of a ‘volume discount’ that would likely drive the number closer to $40 million.

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