Politics
Effort by Mayoral Critics to Put Financial Officials on the Hot Seat Over Advanced Pension Payment Fizzles
As turmoil continues to swirl around the city’s finances, a push by critics of Mayor Brandon Johnson to put Chicago’s top financial officials on the hot seat fizzled Monday.
The leaders of the effort to craft a $16.6 billion spending plan over Johnson’s objections demanded that the chief financial officer, budget director and treasurer explain why the city had paid just $130 million more than required into the city’s underfunded pension funds, when the spending plan set aside a total of $259.6 million in extra cash for the city’s pension funds.
Johnson’s initial proposal called for the city to pay just $120.8 million more than required to the city’s four pension funds in 2026, citing the city’s financial woes. That drew intense pushback from alderpeople concerned it would lead to a second consecutive credit rating downgrade, making it more expensive for the city to borrow the funds it needs to operate.
When the Johnson administration announced last month that it had only paid half of what was required by the budget, which Johnson allowed to take effect without his signature, the leaders of the opposition demanded answers and suggested to reporters that the mayor had defied the will of the City Council.
But acting Chief Financial Officer Steven Mahr, Budget Director Annette Guzman and Treasurer Michael Belsky told the Finance Committee that the city simply couldn’t afford to make the payment since Cook County was months late in sending hundreds of millions in property tax revenue to the city.
“So for 2026, the city … is dividing the advanced pension payment into two equal installments, in an effort to be responsible stewards of the city’s cashbook,” said Mahr, making his first appearance before the City Council after replacing former Chief Financial Officer Jill Jaworski last week. “The first half was paid on Jan. 16 and the second half is currently planned to be paid mid-year.”
Chicago is required to pay $2.85 billion this year into its pension funds in order to comply with a state law that requires two of Chicago’s pension funds be funded at a 90% level by 2055 and the other two by 2058, ensuring they can pay benefits to employees as they retire.
In all, Chicago owes $35.9 billion to its four employee pension funds representing police officers, firefighters, municipal employees and laborers, according to the 2024 Annual Comprehensive Financial Report.
The funds designed to pay pensions to Chicago’s police officers and firefighters each have funding levels of approximately 24.5%, while the fund that pays the pensions of municipal workers is 26% funded, according to the city’s annual financial report. The laborers’ fund has the highest funded level, at 42.6%, according to the report.
Pressed by Finance Committee Chair Ald. Pat Dowell (3rd Ward) on when, exactly, the second part of the advanced pension payment would be made, Mahr and Guzman said that would be determined by Cook County officials’ ability to correct issues with the property tax revenue distribution system.
“This is really about a timing issue,” Guzman said. “We have a ton of expenditures going out in the first quarter, and so we are trying to prudently manage the cash flow as those other revenues come in throughout the year.”
Chicago ended 2024 with a $161 million deficit, forcing officials to use the city’s “unassigned fund balance,” essentially every penny left over in the city’s main bank account after all of the city’s other bills had been paid, to end the year in the black.
That means officials have very little room for error to handle unforeseen financial issues, such as the delay in property tax revenues.
Second installment property tax bills, which are typically released in early July and due in early August, were delayed until December by an overhaul of the county’s property tax system plagued with problems.
The first installment of 2025’s property tax bills will be due no sooner than April, a month later than typical, to give financially strapped property owners more time between bills, under a state law that passed the General Assembly.
Ald. Scott Waguespack (32nd Ward) and other frequent critics of the mayor appeared to accept the explanation offered by Mahr, Guzman and Belsky, but demanded more transparency from the Johnson administration around financial matters.
During the monthslong debate over the city’s 2026 spending plan, few members of the City Council appeared to take Guzman at her word, an indication that Johnson’s relations with the City Council remain fraught.
Johnson warned last month that the City Council may have to make emergency cuts if revenue baked into the city’s 2026 spending plan fails to materialize and that he was “bracing for what could be midyear layoffs.”
It is not clear whether the city’s financial condition has changed significantly during the past month.
The largest chunk of that potential deficit is made up of the additional $89 million in debt the spending plan relies on collecting from Chicagoans who owe payment on overdue utility bills and red-light camera tickets by selling that debt to a private company.
Johnson said those firms would target the poorest residents, including Black and Brown residents, and significant revenue was unlikely to materialize.
Mahr said the city is attempting to sell that debt as required.
Before announcing he would not veto the budget, Johnson signed an executive order preventing the sale of $800 million in medical debt to private collection firms. It is not clear what that will mean for the revenue estimates baked into the city’s spending plan.
The budget also legalizes video poker and slot machines in every Chicago bar or restaurant with a liquor license, and projects that will bring in $6.8 million for the city in 2026.
But that move will actually cost the city $3 million by costing 400 jobs at the permanent casino set to open this fall in River West and prompting Bally’s to stop paying the city $4 million annually, as called for in the agreement it reached with Chicago officials in 2022 for the city’s first, and only, casino license.
The budget also relies on $6 million from a 1.5% increase in the taxes on beer, wine and liquor sold at stores for consumption elsewhere. But that change will actually cost the city $4 million, officials have said.
Contact Heather Cherone: @HeatherCherone | (773) 569-1863 | [email protected]
