Politics
City Council Budget Chair on Pensions, Taxes and the Projected $882M Budget Gap
A budget forecast released by Mayor Brandon Johnson’s office last week shows the city faces an estimated $882.4 million budget shortfall for the 2027 fiscal year.
The projected gap is $283.9 million less than what city officials estimated it would be last year and around $268 million less than the 2026 fiscal year deficit of $1.15 billion.
Speaking to reporters last week, Johnson declined to rule out a property tax increase, but said he would focus on including “progressive” revenue streams in the upcoming spending plan.
“We will not balance this budget on the backs of working people,” Johnson said.
Last year, Johnson proposed a per-employee head tax on Chicago’s largest corporations, an idea that was ultimately forced out of the spending plan by a group of 28 alderpeople who passed a plan of their own.
That plan assumed Chicago would rake in $89.6 million in new revenue by selling $1 billion in debt owed to the city by residents to private entities. Nine months later, none of that money has materialized, leading to a mid-year deficit.
Last month, Johnson announced he will refinance a chunk of city debt to cover the gap, but told reporters Chicago should not rely on one-time fixes to balance the budget.
“We cannot continue to govern by searching for loose change in the couch, or every time that there’s a budget challenge, we revert back to proclivities that have caused tremendous harm to working people in this city,” Johnson said.
In response to Johnson’s forecast, the group of 28 alderpeople, who have dubbed themselves the Budget Accountability Coalition, released a statement accusing Johnson of slow-walking their revenue proposals.
“While the Johnson administration works overtime to deflect from failures of its own making, the reality is straightforward — this administration abandoned Chicagoans on the most basic responsibility of governing: executing the budget,” the group said. “They slow-walked multiple (fiscal year 2026) revenue measures that could’ve generated hundreds of millions towards reducing our structural deficit, then pointed fingers at everyone else for not getting the job done.”
The deteriorating relationship between Johnson and a majority of the City Council could make for a fraught season of budget negotiations. Ald. Jason Ervin (28th Ward), chair of the budget committee, joined “Chicago Tonight” to break down the shortfall.
WTTW News: What’s your reaction to the budget forecast?
Jason Ervin: It’s probably the most honest interpretation of the city’s financial condition that I’ve seen in my 16-year tenure as an alderman. For us to talk about having our pension obligations fully disclosed and put on the table. To have the lawsuits and settlements that we know exist fully disclosed and put on the table — it’s something that we have not seen, which is part of the driving factors of an $882 million deficit. If you take those things out, you’re probably looking more at about $300-$400 million, which is small in comparison to where we’ve been, but it would not have given us that honest assessment of where we are.
What’s behind the smaller deficit this year?
Ervin: A couple of things. We did add some structural revenue with the personal property replacement tax. We’ve added some things and also held the line on expenses, which of course, are the two things that are gonna drive any deficit. However, we still have costs that are increasing. When we look at our pension payments that are growing and also aren’t necessarily the city of Chicago’s responsibility, but we are legally responsible for them. When you look at these factors, if you take some of these things away, the city itself is doing fairly well. It’s just the external factors that have caught up with us and given us this situation.
Could the City Council raise property taxes?
Ervin: It could be if that’s what he proposes. I know that where I live and the residents that I represent, we just saw some of the highest property tax assessment changes for residents whose bills have gone up 30, 40, 50, 60%. I’m not in the position to support that as of today. But again, we have to wait to see what he puts on the table and look at a myriad of changes. Hopefully, between expenses and on the revenue side, we will get to a balanced budget.
If the mayor revives a push for the head tax, would you support it?
Ervin: I think we have to look at progressive revenue as a whole. We need support and help from the state of Illinois. I’ll use an example. If you look at how we collect garbage and our garbage fee, we do have a garbage fee, but it’s the same fee that somebody in Beverly pays that someone in Garfield pays and that somebody in other parts of the city pays. Which, again, is a flat tax, which is regressive. We have to look at people’s property values and assess along those lines as well. Which again is not ideal, but it will give some level of value as it relates to what we’re doing. I think we have to find better ways. We also have to work with the state as it relates to sales tax modernization. We’re one of a handful of states that have an archaic sales tax system. The city of Chicago on its own can’t implement these things, so we have to work with the state to get these done.
What’s your reaction to a coalition of alderpeople accusing Johnson of slow-walking revenue measures?
Ervin: I think that’s not a fair assessment. I sat in working groups, met with some of the same bankers. The biggest chunk of that was an $89 million decision to sell debt that 20 of the top bankers in this country said no to. I think that speaks volumes over whatever the thought was. Again, to sell the debt — when you look at that — the impact it would’ve had on some of our communities would’ve been monstrous.
