+ Revenue, Efficiencies, and Savings

The Budget Gap

In recent years, the City’s reliance on federal Covid-relief dollars has allowed us to invest in recovery while preparing for difficult-but-necessary decisions. But as these one-time funds have been spent down steadily, the deficit has risen steadily—from $128 million in 2023, to $538 million in 2024, to $982 million in 2025.

The City’s Budget Office accurately predicted the 2025 deficit a year ago, in part because the key drivers of the deficit were well known. These include increased personnel costs tied to recently approved contracts with unions representing City workers including police and laborers ($304 million); increased pension costs as we climb the State-mandated pension ramp ($150 million); and CPS-related pension obligations that the City has long covered ($175 million). In addition, the City has recently seen a precipitous decline in the Personal Property Replacement Tax—revenue that the State collects and pays to local governments to replace money that municipalities lost when the State took away their ability to tax corporations’ personal property—as revenue from this tax returns to historical levels following a sharp spike in 2021 and 2022 ($169 million).

With large budget deficits projected for 2026 and 2027, City government must reject one-time actions that kick the can down the road. Instead, we need a combination of additional revenue and efficiencies that are structural in nature.

Property Taxes

In his initial budget proposal, the Mayor recommended increasing property taxes by $300 million—the largest such increase since 2016. While the City needs new revenue, drastic property tax increases like this risk catching homeowners by surprise. It’s very difficult to budget for large one-time increases, putting those on a fixed income in an especially vulnerable position. After closely scrutinizing this aspect of the proposal, I joined my aldermanic colleagues in unanimously rejecting it.

An interim proposal included a much smaller $68.5 million property tax increase tied to the consumer price index (CPI). In recent years, City government has raised property taxes based on CPI several times, which some argued allowed homeowners manageable and predictable increases while responsibly improving the City’s budget outlook.

Ultimately, this Budget does not include any property tax increase, but taxpayers should still be wary. Instead, it relies in part on delaying a $40 million debt payment and hastily throwing together savings that have not been fully vetted—strategies that, when used in the past, contributed to our current budget crisis. This continued reliance on risky, one-time fixes will very possibly lead to a credit downgrading, potentially costing the City additional hundreds of millions in borrowing costs. So, no property taxes now offer little relief when it likely means larger increases later.

Finally, it bears emphasizing that homeowners will likely still see an increase to their property tax bills in 2025. The property taxes set by City government are only 23% of your overall property tax bill. The property taxes that CPS sets represent the majority of your tax bill, and the District will likely continue raising property taxes in the coming years to help address its own fiscal challenges. Accordingly, the recently elected members to the CPS Board will play a key role in deciding how the majority of residents’ property taxes are spent.

Other Revenue

I applaud the Mayor’s Office for declaring a $571 million surplus of unused Tax Increment Financing (TIF) funds—the largest in recent memory. The City will retain a quarter of these TIF funds for its own use, and send over half of the surplus to Chicago Public Schools to help stabilize the District’s budget for the remainder of the 2024–25 school year.

Additional new revenue will come from increases in the lease tax on personal property, which applies primarily to cloud computing services; the entertainment tax on streaming and cable services; and the tax on parking downtown. The 2025 Budget also increases the tax on plastic bags by 3¢ and extends the downtown rideshare tax to apply to weekends, in order to encourage transit use in the central business district. Collectively, these increases will bring the City $297 million in revenue to help fund City services relating to public safety, sanitation, building maintenance, and vehicle repair.

Alternatives

State law significantly limits the types of new revenue that the City can collect. Notably, the Illinois Constitution prohibits local governments from taking residents’ income into account when adjusting taxes and fees. And while a majority of Chicagoans voted to amend this constitutional provision to permit more progressive forms of taxation, this Fair Tax referendum failed to receive the requisite support from voters across Illinois. Chicago is further constrained by needing prior authorization from the State to institute any particular tax or fee.

As a result, City government must engage in careful, long-term planning when pursuing meaningful revenue alternatives to property taxes. Unfortunately, I believe the Mayor’s Office’s planning was lacking. Recently, my office surveyed residents across our Ward about the revenue policies they would like City government to explore during the current budget cycle. The options that residents preferred include a vacancy fee on certain properties left vacant for an extended period of time (36%); asking large non-profits such as universities to contribute a portion of the property taxes they would owe the City but for their non-profit status (33%); and a congestion tax on those who drive into our central business district to encourage them to take alternative transportation and reduce traffic (20%). The congestion tax was the only option of the three that the Mayor’s Office meaningfully pursued.

Another 20% of survey respondents preferred that the City seek additional revenue from the State of Illinois. But the State is limited in its ability to provide Chicago with significant additional funding support, as it’s facing its own multi-billion-dollar budget deficit. To be sure, the State could continue to support Chicago financially by, for example, increasing the portion of the Illinois income tax that Chicago and other municipalities receive to the levels that existed before 2011. However, we need the Mayor’s Office and others across City government to build stronger relationships with State leaders so that true collaboration can occur. Indeed, the City lost $40 million in additional revenue due to last-minute amendments to legislation that the Illinois General Assembly passed just last month, thereby making an already challenging budget situation for the City worse. And these conversations must take place year round, and not simply during the City’s annual budget season.

Savings and Efficiencies

In carrying out their responsibilities to taxpayers, City leaders must aggressively pursue savings and efficiencies each and every budget cycle. In doing so, however, we must exercise care in avoiding cuts that could negatively impact critical services.

Approximately 68% of the City’s discretionary fund is earmarked for public safety departments including Police, Fire, and Emergency Management and Communications. Another 8% will go toward maintaining City departments’ buildings and vehicles, with 6% allocated toward sanitation issues and parkway issues including garbage collection, street sweeping, and rodent abatement.

It would be irresponsible to eliminate the budget gap solely with cuts, as the budget gap is approximately half the size of the budget for the Chicago Police Department and almost three times the size of the budget for the Department of Streets and Sanitation. It’s simply not in the best interests of Chicagoans to see less frequent street sweeping, fewer trees trimmed, or residential garbage collection privatized entirely.

To be sure, City government has endeavored to reduce costs in recent years, primarily by eliminating vacant positions. In 2021, for example, the City eliminated approximately 1,900 vacancies, and for 2025, the Mayor has proposed eliminating another 600 across most City departments.

Nevertheless, the 2025 Budget includes funding for hundreds of positions that have been vacant for at least six months. Moving forward, we must review these persistent vacancies more closely and push departmental heads to exercise more creativity and urgency in filling them. At bottom, we cannot afford to continue setting aside sorely needed funds for any position that a department isn’t confident it can fill.

Likewise, City leaders must apply greater scrutiny to each department’s significant non-personnel expenses. In previous years, the City realized cost savings by lowering healthcare plan rates and renegotiating contracts with third-party vendors. While the 2025 Budget includes approximately $44 million in cuts to various administrative and operational expenses, it remains unclear exactly what was cut and whether further reductions can be achieved without jeopardizing key services.

In addition, the City will realize $175 million in savings by shifting the cost of CPS’ pension payment for non-teaching professionals to CPS’ budget. The City will also save approximately $150 million by scaling down migrant services, including the closure of various temporary shelters.

+ Investments

Public Safety

Public safety is one of Chicagoans’ top priorities. Accordingly, investments in public safety make up the vast majority of the City’s discretionary spending, including violence interrupters, police and fire staffing, the 9-1-1 call center, victim support, and more. By far, the Chicago Police Department is the largest expense in the budget. Its budget has steadily increased in recent years and accounts for 32% of City discretionary funds.

Frustratingly, the Mayor’s initial budget proposal proposed cutting 162 police department positions tied to improved training and officer mental wellness. After sustained advocacy from myself, other elected officials, and outside community groups, those positions were fully restored, but these positions never should have been on the chopping block, particularly when the City has struggled mightily to comply with obligations under the federal consent decree.

I continue to be concerned with the lack of transparency and accuracy regarding CPD’s overtime spending, which the Inspector General has recommended improving to prevent waste, fraud, and abuse. In 2022, for example, the Department spent more than twice as much on overtime as it budgeted; in 2023, it spent almost three times as much as it budgeted. With no indication that CPD will come under its 2024 overtime target—$100 million, the same target it has had for the last three years—we need greater transparency regarding true overtime projections, clarity regarding how funds tied to police vacancies are used to cover overtime costs, and accountability in meeting the budgeted target.

Similarly, CPD and the Law Department continue to underestimate the cost of misconduct lawsuits. Over the past five years, CPD exceeded the amount appropriated for misconduct settlements and judgments every year but one. And just a few days ago, in a case alleging improper vehicle pursuit, a jury awarded the plaintiff $80 million—nearly equal to the entire budget that the City set aside for police misconduct lawsuits for all of 2024. And with dozens of high-profile misconduct cases currently in the queue, it’s past time for City leaders to be honest about the impending cost of these lawsuits and work to mitigate risk to the City.

More broadly, the City must ensure that our public safety resources are being used as efficiently and effectively as possible. This is why I passed an ordinance requiring the City to commission a third-party staffing analysis for CPD, which will provide recommendations for distributing officers and detectives to maintain sustainable and adequate staffing coverage and eliminate disparities in police response times. Unfortunately, the City missed the deadline to enter into a contract by six months, with little explanation for the delay, thereby jeopardizing the possible completion of the analysis before next year’s budget cycle ramps up.

Finally, the 2025 Budget imperils future investments in violence prevention efforts, which are critical to meeting the Mayor’s goal of fewer than 500 homicides in 2025. I’m very concerned that the 2025 Budget shifts $8 million in federal Covid-relief funds away from violence prevention efforts that we know reduce crime and stabilize communities. We will not end the crisis of gun violence in Chicago without bold investments in interruption and intervention.

Social Services

Affordable housing ranked second among 47th Ward residents’ priorities in our annual budget survey. The 2025 Budget includes a modest $7 million to assist with rapid rehousing—a program that has demonstrated repeated success and saves money long-term—but falls short of the transformational investment that Chicagoans need.

The Budget also includes an additional $10 million in funding for 1,000 additional youth jobs. These programs provide job training, mentoring, and a positive pathway to young people across Chicago and I’m glad to see this investment.

For many years, community leaders throughout Chicago have advocated for an expansion of our mental health supports, including creating a mental health crisis-response program in which paramedics and crisis workers respond to mental-health 9-1-1 calls. The 2025 Budget includes an additional $1.5 million to establish a special team at the 9-1-1 call center to direct mental health crisis calls; however, I’m disappointed that the Budget does not expand the current crisis-response program to operate on evenings and weekends.

In its 2022 Budget, the City used federal Covid-relief funds to pilot a Guaranteed Basic Income program that provided $500 monthly to 5,000 Chicagoans. Recently, the University of Chicago praised the program for its thoughtful implementation, noting that it enabled recipients to care for sick loved ones, afford increasing rents, and recover from unemployment. I’m disappointed that the Mayor cut the second phase of this program, and that the Budget does not include any other similarly bold program to help working families.

Other City Services

Chicagoans depend on essential city services such as tree trimming, garbage and recycling collection, streetlight maintenance, and rodent abatement. These services are expected and needed, impacting our health and safety and making Chicago a city you want to live and work in. This year, most core services are maintained, but in a few cases, residents may see the impact of modest cuts to the quality and reliability of certain services.

For example, the Department responsible for trash collection and recycling will lose 43 positions, likely impacting the reliability of trash and recycling pick-up. That Department’s tree stump-removal budget has also been reduced.

This budget also eliminates programs, started with COVID-relief dollars, that provided support to small businesses, providing grants and other assistance to expand local hiring. Programs like this continue to be critical, given rising costs that make it difficult for small businesses to stay open.

+ Moving Forward

With an even larger budget gap projected in 2026, City Council and the Mayor must start work now to avoid another budget crisis. The solutions that residents most prefer require significant time, effort, and collaboration that cannot happen in a shortened budget process. Other creative possibilities may not have been thought of yet, but need to be hammered out. This type of process will require robust engagement and collaboration across state government, the business sector, and organized labor to reach agreement on the long-term solutions that set our city up for success.

As a starting point, I am prioritizing the solutions residents preferred in our budget survey, including a new fee on long-vacant properties, a congestion tax in the central business district, and asking tax-exempt universities and large hospitals to voluntarily chip-in at least a portion of the property taxes they would have paid but for their non-profit status. In addition, we must look more closely and critically at persistently vacant positions and large non-personnel expenditures across departments.

We knew this year’s budget cycle would be challenging. But, at multiple steps, roadblocks were set unnecessarily, including the Mayor delaying sharing his budget recommendations and failing to meaningfully collaborate with City Council and other key stakeholders in and outside of government prior to that introduction. Moving forward, Chicago can’t afford for that to happen again.

+ New revenue, savings, and efficiencies

• $175 million by shifting the cost of CPS’ pension payment to the Chicago Public School’s budget
• $150 million by scaling down migrant services including by closing temporary shelters
• $132 million from declaring a TIF surplus, with an additional $296M from the surplus going to CPS to help stabilize the District’s budget for School Year 2024-25
• $128 million from increasing the Personal Property Lease Tax, which applies primarily to cloud computing services, from 9% to 11%
• $74 million from reallocating COVID-19 relief dollars, ending certain programs early including a guaranteed income pilot, small business supports, and violence prevention services
• $51 million from closing approximately 600 vacant positions across most City departments
• $44 million from non-personnel cuts to most City departments, including reductions in software maintenance and licensing, overtime, and technical services contracts with third parties
• $43 million from a reforecast of anticipated wages and salaries based on revised hiring expectations
• $40 million from delaying the payment of existing debt associated with the purchase of the former Michael Reese Hospital site
• $16.5 million from amnesty programs that incentivize paying back debt for vehicle violations and commercial driveway permits by forgiving interest on that debt
• $14 million from the installation of new automated speed enforcement cameras
• $13 million in savings from refinancing in the bond market
• $13 million from an increase of the Entertainment Tax on streaming and cable services from 9% to 10.25%
• $11 million from increasing the downtown parking tax each day of the week to 23.25%, from 22% on weekdays and 20% on weekends
• $10 million from charging large special events for overtime costs associated with Police, Fire, and other public safety departments
• $8 million from extending the downtown rideshare tax to apply to weekends and lowering it from $3.00 to $2.75, designed to encourage transit use in the central business district
• $5 million from increasing the tax on plastic bags by 3¢, from 7¢ to 10¢

+ Substantial new investments

• $10 million for 1,000 new youth jobs
• $7 million to assist with rapid rehousing of unhoused Chicagoans
• $1.5 million to establish a behavioral health dispatch team to field mental health-related 9-1-1 calls and dispatch services accordingly