Politics

City Council Votes 44-6 to Add $75M From Parking Meter Sale to Pension Payments, Opening New Budget Gap

The Chicago City Council voted 44-6 Monday to use the $75 million the city got from the new owners of the parking meters to make an extra payment to the city’s woefully underfunded pension funds, opening a new gap in the 2027 spending plan.

The deal negotiated by a group of Chicago City Council members to green-light Stonepeak Partners’ purchase of the city’s 36,000 parking meters required the New York-based firm to pay the city $75 million once the deal closed and earmarked those funds for the city’s pensions.

Mayor Brandon Johnson’s proposed budget sends more than $2.94 billion to the city’s four pension funds. State law requires two of Chicago’s pension funds to be funded at a 90% level by 2055 and the other two by 2058, ensuring they can pay benefits to employees as they retire.

That includes $364 million more than required by state law to chip away at the debt that has been accumulating during the past 20 years, records show.

When Johnson included the $75 million from new owners of the parking meters in the supplemental pension payment that officials had already anticipated making before the deal was reached, the alderpeople who negotiated the deal balked.

The cash from Stonepeak should be added on top of the $2.94 billion pension bill the city faced, they argued, like a family using extra money to pay down the principal on their mortgage.

The City Council’s lopsided vote to increase the city’s pension payment opens a new hole in the city’s 2027 budget that must be closed with new spending cuts, new taxes or more borrowing.

Johnson’s budget also relies on approximately $100 million from the revival of the so-called head tax, which would impose a $25 per month per employee tax on all firms that have more than 125 employees, according to the proposal.

That tax was soundly rejected by the Chicago City Council a year ago, and there is no indication that it will meet a different fate this year.

The vote signals the spending plan faces a steep climb to win the support of a majority of the Chicago City Council before the end of the year.

Alderpeople who pushed the change have offered no proposal to bridge the new gap in the city’s spending plan, which must be approved by the end of the year.

Ald. Pat Dowell (3rd Ward) said it was Johnson’s responsibility to propose a solution to the additional gap.

“We are drawing a hard line in the sand,” Dowell said, adding that the change would save taxpayers $213 million over the next several decades while fulfilling the promises made to city employees.

Ald. Jason Ervin (28th Ward) said the city would have no choice but to slash spending proposed for crucial programs, including on libraries and to help those who are unhoused, if they send the unanticipated windfall to the city’s pension fund.

“What sense does that make?” Ervin asked, adding that the city’s pension funds have been slowly improving. “I don’t know anyone who pays two years of rent ahead of time, when they don’t have the basics.”

Ervin, Ald. William Hall (4th Ward), Ald. David Moore (17th Ward), Ald. Byron Sigcho-Lopez (25th Ward), Ald. Rossana Rodriguez Sanchez (33rd Ward) and Ald. Leni Manaa-Hoppenworth (48th Ward) voted against the measure.

In addition, the new sale of the parking meter deal calls for Stonepeak to share 5% of its profits with the city, which is expected to yield $376.2 million for the city over the next 57 years, according to the agreement. Those funds will be earmarked for the city’s pension funds on top of the payment required by state law and the supplemental pension payment, according to the measure passed Monday by the City Council.

Chicago taxpayers are now set to pay a total of $3.01 billion into its four pension funds in 2027, setting a new record.

Chicago’s pension debt rose by approximately $500 million in 2025, according to the city’s audited annual financial report, with the amount the city owes to its four pension funds hitting $36.4 billion.

Chicago’s pension debt has grown by nearly 11% since 2020, adding approximately $3.5 billion to the city’s debt, records show.

The fund designed to pay pensions to Chicago’s police officers is just 25.5% funded, while the fund that pays the pensions of the city’s firefighters is 25.2% funded, according to the city’s annual financial report.

The laborers’ fund has the highest funded level, at 44.1%, while the fund that pays pensions to municipal workers is 28.2% funded, according to the report.

By comparison, public pension funds in other large cities have average funding levels of about 70%.

Since 2023, the city has paid more than $1 billion into its four pension funds than required by state law, records show.

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

---