Chicago is required to pay $2.85 billion this year into its pension funds in order to comply with a state law designed to ensure the pension funds can pay benefits to employees as they retire.

Chicago Budget Director Annette Guzman joined “Chicago Tonight” to discuss the budget negotiations.

The current proposed budget would impose a monthly $21 per employee tax on companies with more than 200 employees to generate $82 million to fund violence prevention and youth employment programs.

A marathon session before the City Council’s Budget and Government Operations Committee on Monday made it clear there is no easy way to bridge the city’s $1.19 billion projected shortfall, leaving alderpeople across the political spectrum frustrated as the budget debate hits a tipping point.

“Chicagoans deserve the truth about the fiscal conditions of our city,” Mayor Brandon Johnson said. “Our economy does remain resilient, but fiscal discipline is certainly required in this moment.”

The Chicago Police Department exceeded its nearly $2 billion budget, approved by the Chicago City Council, by $207 million, according to city data.

Chicago’s $17.1 billion spending plan is now in place for 2025 — but it didn’t come easily. Forceful pushback from alderpeople blocked property tax hikes — but the budget still includes $165.5 million in additional taxes and fees to generate revenue.

Two key Chicago City Council committees voted Tuesday to send Johnson’s $17.3 billion spending plan for 2025 to the full City Council for a final vote. The two-step process is set to start Wednesday, with a final vote scheduled for Friday.

“A budget that would lay off workers and cut services is just, you know, one that should not be tolerated by any Chicagoan,” Mayor Brandon Johnson said.

The new plan comes after the Chicago City Council rejected Johnson’s first two proposals to raise property taxes in order to avoid draconian cuts to city services and thousands of layoffs.

Chief Financial Officer Jill Jaworski told members of the City Council’s Budget and Government Operations Committee on Wednesday that the $17.3 billion spending plan “prioritizes the city’s long-term fiscal stability.”

Mayor Brandon Johnson said proposing the tax hike, the second largest in modern Chicago history after the $588 million property tax hike pushed through by former Mayor Rahm Emanuel in 2016, was a “difficult decision” that was the result of an "excruciating process.”

Between March 2021 and June 2024, Chicago spent more than $238.8 million on a host of programs including affordable housing, mental health, violence prevention, youth job programs and help for unhoused Chicagoans, according to the most recent reports filed with the U.S. Department of the Treasury as required by federal law.

Chicago is facing a $223 million budget gap this year, and the city is projecting a nearly $1 billion shortfall in the 2025 fiscal year.

The move was announced Monday by Annette Guzman, the city’s budget director, and comes as city leaders stare down a $222.9 million deficit this year and a projected $982 million shortfall in the 2025 fiscal year.

“There are sacrifices that will be made,” Mayor Brandon Johnson said.