Let me bold type the important part of this mostly fine article about the city’s budget crisis, since it might not be what you’d guess:

By biting the bullet all at once, aldermen were told they would build a financial cushion large enough to carry them through the 2011 election without another tax increase.

But that was before the housing market hit rock bottom and food and fuel prices began a steady rise.

Hit what? Here’s an article from a week before that sentence was written:

“I don’t think we get strengthening in the housing market until late 2011 or 2012,” said Mark Vitner, senior economist for Wachovia, the nation’s fourth largest bank and one that this month hired the number-two man from the Treasury Department as its new chief executive officer to shore up its own growing exposure to mortgage debt.

Or, as Atrios puts it, “God has not commanded that home prices go up by 10% every year.”

The city’s even lucky in that reverse white flight–aided by the CHA Plan for Transformation, of course–seems to have made the market more stable than in other cities.

Meanwhile, besides the immediate effect of the housing-market downturn on city revenues, keep in mind that the city’s acquisition of Michael Reese Hospital is predicated on the housing market hitting bottom quite soon. And, specifically, not continuing to find new bottoms. Which, ibid., has been an ongoing assumption for the past couple years.

Ben Joravsky has a post today about the elephants in the room, property taxes and TIFs, but doesn’t think anything dramatic will happen until after the IOC weighs in on the 2016 Olympics: “Not when [Mayor Daley is] trying to show the world that everyone in Chicago just can’t wait to host the games.” I’d take exception here, in part–I think the perception is that everyone does want the games, by way of the media feedback loop, and, hell, it might actually be true. Chicagoist, as good a bellwether as any, today: “Woot! Bring on the Olympics!” ORLY? (W00t, srsly?) Oh noes.

Update: Mick has more details on why there’s a shortfall.

Other indicators to watch out for: rising heating and cooking gas prices from Peoples Gas and North Shore Gas, which will be much more of an issue come winter.