Chicago City Hall. (Michael Izquierdo / WTTW News)
In an effort to address an ongoing budget shortfall, the city of Chicago is implementing a hiring freeze and limiting travel and some overtime.
The move was announced Monday by Annette Guzman, the city’s budget director, and comes as city leaders stare down a $222.9 million deficit this year and a projected $982 million shortfall in the 2025 fiscal year. Those numbers were released late last month.
“Effective today, we are enacting a series of budgetary restrictions, including a citywide hiring freeze, and stringent limitations on non-essential travel and overtime expenditures outside of public safety operations,” Guzman said in prepared statement.
In announcing the move, Guzman said this year’s deficit is driven by a drop in revenues from the State Personal Property Replacement Tax and an unpaid pension payment from Chicago Public Schools.
Read More: Chicago Faces $982M Budget Shortfall in 2025, $223M Gap in 2024: Johnson
Both Guzman and Mayor Brandon Johnson previously stressed that this year’s gap is almost entirely due to the decision by the members of the Chicago Board of Education, who were appointed by Johnson, not to contribute $175 million to the pensions of employees who are not teachers.
CPS has made that payment since 2020, but declined to do so this year, as it grappled with a $505 million deficit of its own.
Chicago voters are set to elect the first members of a new Chicago Board of Education in November, beginning its transition from mayoral control.
The latest budget crunch comes after several years of city finances improved by a booming real estate market, a faster-than-expected recovery from the COVID-19 pandemic and nearly $2 billion in federal pandemic assistance.
Last month, Johnson did not immediately rule out a property tax hike to deal with the gap. The mayor campaigned on a promise not to raise property taxes, the city’s largest source of revenue.
While the city looks to drum up potential revenue, expenses continue to grow, namely, pension costs.
The city faces a $2.85 billion pension bill in 2025, according to city records, in order to comply with a state law that requires two of Chicago’s funds be funded at a 90% level by 2055 and the other two by 2058, which would ensure benefits can be paid to employees as they retire.
Monday’s announcement that city officials will cut back on overtime, comes after $524 million was spent on overtime in 2023, according to records previously obtained by WTTW News.
That was a 19% increase over 2022. More than half of the 2023 total was used to compensate Chicago Police Department officers, according to the records.
Read More: Chicago Spent $524M on Overtime in 2023, Including $293M for Police, Setting New Records
CPD spent $293 million on overtime last year, 40% more than in 2022 and nearly three times the $100 million earmarked for police overtime set by the Chicago City Council as part of the city’s 2023 budget.
Monday’s announcement on overtime cuts noted they will come from “outside of public safety operations.”
Heather Cherone and Jared Rutecki contributed.
