Politics

Mayor Brandon Johnson Sounds Alarm on City Budget, Decries Trump’s Threats

Mayor Brandon Johnson on Monday sounded the alarm about the financial crisis facing the city, warning that Chicago “will have to do more with less” as President Donald Trump threatens to upend its finances and officials confront the results of decades of financial mismanagement.

Chicago’s finances have long been out of whack, pinched by soaring pension costs, spiraling personnel costs and a massive amount of debt. The city’s fiscal stability is also threatened by the crises facing the Chicago Transit Authority and the Chicago Public Schools. Both agencies survived the COVID-19 pandemic with federal financial assistance and must now stand alone after the ravages of the pandemic.

“We essentially need to do more with less,” Johnson said in his ceremonial office, just before signing an executive order to form a working group to craft solutions to the city’s fiscal crisis. “The truth is that the city is at a crossroads right now.”

Chicago faces a likely budget deficit in 2026 of nearly $1.2 billion, according to the city’s most recent budget forecast, released in August. If the economy worsens significantly, that gap could swell to $1.6 billion, according to the forecast.

Assuming a robust economy, that shortfall could shrink to $634 million in 2026, according to the forecast that no one at City Hall believes is likely.

The city’s financial position is set to worsen once again in 2027, with a likely deficit of $1.3 billion, according to the budget forecast. If the economy worsens significantly, that gap could swell to $1.93 billion, according to the forecast.

Under the rosiest scenario, the city’s 2027 gap could be as small as $703 million.

That dire financial outlook is complicated by Trump’s attempts to revoke all federal funding from Chicago because officials have refused to stop protecting undocumented immigrants from deportation Johnson said, calling the federal government “hostile.”

The working group will be representatives of Chicago’s business community, nonprofit organizations, civic organizations, labor groups and the City Council, according to the executive order.

Budget Director Annette Guzman and Ald. Jason Ervin (28th Ward) have until April 30 to recommend members of the task force to the mayor, according to the executive order.

Read the full executive order.

The working group’s recommendations are due to the mayor by Aug. 31, typically when the process of crafting the city’s budget for the next year begins in earnest, according to the executive order.

The city’s budget office will lead a comprehensive review of city operations and programs as part of an effort to identify not just savings but how to “streamline operations and improve services that are delivered to our residents.

Chicago expects to receive approximately $3.5 billion in new and existing federal grant dollars in 2025, officials said. The city’s 2025 budget is $17.1 billion.

In addition, the CTA expects to receive $1.9 billion from the federal government to extend the Red Line south to 130th Street and CPS received $1.3 billion from the federal government during the 2024-25 academic year.

“We do not take these threats lightly,” said Johnson, who has repeatedly refused to revoke the city’s Welcoming City ordinance or implore the president not to slash Chicago’s funding.

“Trying to force your will to break the spirit of working people in order to have a conversation, that’s terrorism. We’re not going to negotiate with terrorists,” Johnson said April 15.

Early Start After 2025 Budget Negotiations Spun Out of Control

The Chicago City Council narrowly approved the city’s 2025 spending plan with just 18 days to spare, after weeks of intense negotiations spiraled out of the mayor’s control.

Facing a $982.4 million gap, Johnson and his budget team delayed his budget address until the end of October, only to surprise everyone with a proposal to hike property taxes by $300 million while ruling out cuts to jobs or city services.

The City Council unanimously rejected that proposal, sending everyone back to the drawing board. The final package hiked a host of other taxes and fees to generate an additional $165.5 million, records show.

By forming a working group months before he will have to reveal an updated budget forecast, Johnson is working to avoid some of the mistakes he made that complicated the negotiations around the 2025 budget.

But there are few easy paths out of the morass of red ink the city finds itself in, even if Trump’s attempts to slash federal aid to Chicago are unsuccessful.

Johnson declined Monday to rule out service reductions and layoffs of city workers to balance Chicago’s budget, but said he would look first to increase productivity from city employees and increase revenue before resorting to painful cuts.

“We will have to deal with the realities of the billions of dollars that are being threatened by the federal government,” Johnson said. “That’s a different scenario that we weren’t under before.”

The Chicago Police Department, which has a 2025 budget of nearly $2.1 billion, accounts for approximately 46% of Chicago’s discretionary spending, records show.

That means any significant cuts made to balance the city’s budget would likely impact CPD’s bottom line. Such a move would no doubt draw the ire of the politically powerful Fraternal Order of Police, Lodge 7, and face intense opposition from pro-police members of the City Council.

Such a proposal would be politically perilous for Johnson, who has faced unrelenting criticism that he wants to “defund the police.”

It could also pit two parts of Johnson’s political base against each other, with progressive leaders likely to hail a reduction in funding for CPD, even as many Black Chicagoans demand more and better police protection in neighborhoods where the rate of crime and violence remains stubbornly high.

Contact Heather Cherone: @HeatherCherone | (773) 569-1863 | [email protected]

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