‘We can change the trajectory now’: Chicago budget leaders float cuts and fee hikes to fix deficit

Chicago Mayor Brandon Johnson’s budget working group has given him dozens of options — including furloughs, hiring freezes, fee increases and a property tax hike tied to inflation — to choose from as he works to close a $1.15 billion deficit for next year.

The 24-member Chicago Financial Future Task Force that Johnson created through an April executive order laid out 89 options in an interim report that outlines ways to cut costs by as much as $455.5 million and raise revenue by up to $1.65 billion. The group of business and civic leaders will issue a final report in May with long-term ideas.

“Chicago didn’t develop a billion-dollar gap in a year, and we won’t erase it in a week, but we can change the trajectory now,” Jim Reynolds, co-chair of the task force and founder of Chicago-based Loop Capital, said in a statement. “After decades in finance, I know the cost of inaction is higher than the cost of action.”

Chicago is among a number of major U.S. metropolitan areas facing imminent budget crises after running through pandemic aid. New York, San Francisco and Los Angeles are also staring down austerity measures and an unfriendly administration. Chicago is in a standoff about immigration with President Donald Trump. Credit rating risks, like the city’s one-notch downgrade from S&P Global Ratings in January, threaten to exacerbate the problem by raising borrowing costs.

A separate report the mayor commissioned from E&Y has yet to be released.

Johnson set the external reviews in motion after last year’s acrimonious budget process and S&P’s downgrade. In 2024, the City Council unanimously rejected his $300 million property tax increase to balance the budget. He cobbled together a spending plan with other tax increases but ended fiscal 2024 with a $146 million deficit after not getting a pension reimbursement from the schools and weaker than-expected business tax revenues.

Early forecasts from the Johnson administration indicate bigger deficits in the next few years even as public safety, housing, transit and mental health needs continue to grow.

If the mayor and city council choose, they have the authority to implement some of the group’s suggestions. Others would require approval by the state or bargaining with unions. The menu of recommendations for 2026 includes:

• Employee benefit reforms such as aligning health plans with peer cities for $81 million to $103 million in savings

• Organizational changes, such as vacancy freezes — including in the police department • reducing overtime and changing hiring practices for up to $275 million in savings

• Increase garbage fees to generate as much as $296.9 million in new revenue

• Resume property tax increase tied to inflation for $56 million in additional revenue

• Expand congestion surcharge based on geography, time and vehicle class for $26 million to $103 million in new revenue

“Chicago is facing a serious budget crisis, but cuts can hurt working families,” Karen Freeman-Wilson, co-chair of the task force and chief executive officer of the Chicago Urban League, said in a statement. “We need revenue proposals that are fair, so we don’t gut libraries, clinics, or job programs that vulnerable communities rely on. Protecting essential services is non-negotiable even as we seek efficiencies to relieve fiscal pressure.”