Politics
Service Cuts on the Table as Chicago Confronts $1.15B Budget Shortfall, Alderpeople Say
Mayor Brandon Johnson is expected to unveil his 2026 budget proposal to the Chicago City Council on Oct. 16. A budget forecast released in late August projects a $1.15 billion deficit for the city, driven by the end of one-time federal pandemic aid and continued uncertainty over pension payments for Chicago Public Schools employees.
Once the City Council receives Johnson’s budget proposal, alderpeople will have until Dec. 31 to negotiate modifications and garner the 26 votes necessary for passage.
Last year’s budget passed by a vote of 27-23 on Dec. 16, 2024.
Much has been made about how the city should address the deficit — by increasing revenue or cutting spending or both. At a September news conference, Johnson indicated he would consider increasing city revenues after a budget task force he created in May released its report.
“The working group fully established that we do not have a spending problem in Chicago,” Johnson said. “We have a revenue challenge in Chicago, and that’s an important conclusion that I believe was necessary for the people of Chicago to hear.”
Ald. Jason Ervin (28th Ward), chair of the Budget Committee, said Chicago must expand revenues while cutting costs tied to inefficient services and lawsuits filed against the city.
“Light poles falling on people, that’s something we should be able to get a handle on and be able to deal with,” Ervin said. “Tripping hazards from sidewalks, those are things that we know about that if we address them in a more frequent manner, then we spend a thousand bucks, save $500,000. I don’t think we can cut our way out of this situation nor do I think we can tax our way out of this situation.”
Chicago taxpayers have spent at least $231.2 million on police misconduct lawsuits in 2025. In all, the city has paid $491.7 million in police misconduct settlements and verdicts since 2019, according to a WTTW News analysis.
Ald. Matt Martin (47th Ward) said Chicago’s financial problems stem from a combination of unnecessary spending and insufficient revenues.
“Chicagoans, they don’t think this is just a revenue issue,” Martin said. “I think it’s incredibly important that we on City Council look first to tighten our belts before we go to taxpayers asking them to chip in more.”
Martin highlighted costs from third-party contracts — when the city hires a private business or individual — and vacant government positions as potential areas for cuts.
Johnson said in July he would not propose a hike in property taxes. But his budget task force recommended raising property taxes annually to keep pace with inflation.
Property taxes are a historically reliable revenue source for the city, and an increase this time around could generate $56 million in 2026.
Last year, the City Council voted unanimously to reject a property tax hike proposed by Johnson. But the sheer size of this year’s budget shortfall has put property tax increases back on the table for some alderpeople.
“I don’t think it’s appropriate for us to take anything off the table at this early stage because that billion-dollar budget gap, that’s huge,” Martin said. “Just to put that in perspective, that’s about what we spend on our entire patrol budget for CPD or if we cut the entire Department of Streets and Sanitation we would still have an $800 million gap.”
Ervin and Martin indicated they want the state government — which dictates whether the city can raise taxes on incomes and services — to create more ways for Chicago to raise revenue.
“We have a sales tax program that’s based on a 1930s economy, and here we are 100 years later with a different type of economy,” Ervin said. “Many states around us have made the move to a more progressive and more reasonable sales taxes on services. I think it’s time for Illinois to do the same thing.”
Martin said he would like permission from officials in Springfield to compel Chicagoans who can afford to chip in more to pay a larger tax share.
