Yes, it’s that bad. Chicago budget officials announced at a press conference Thursday afternoon that the city is expected to come up about $141 million short this year and $420 million in the hole by the end of 2009.

The slowed real estate market was a big culprit–the real estate transfer tax will pull in $51 million less this year than it did in 2007. People are also spending less on gas, cigarettes, and bottled water, so tax monies on those items aren’t coming in as expected.

And of course city spending is way up–by $28 million over what was budgeted, mostly on snow removal and extra police–despite $20 million in cuts made earlier this year.

Perhaps what was most striking about the announcement was that budget officials refused to outline any strategies for coping with the deficit. Layoffs? “I’m not going to speculate on the number of layoffs or if there will be any,” said chief financial officer Paul Volpe. Tax hikes? “Mayor Daley has ruled out a property tax increase…. But we’re going to have to make some tough choices.” Dipping into the millions of dollars in reserve from the Skyway lease deal? “Today everything is on the table.” Reductions in street cleaning, tree trimming, pothole repair? “We hope that any changes we make will have a minimal impact on critical services.” 

So what is going to happen?

“We’re not here today to talk about solutions,” Volpe said.