2025 Budget Blog

Following the success of last year’s Budget Blog, which provided a relatively succinct way to communicate with residents about the complicated topic of the City Budget, 1st Ward Staff are once again maintaining a blog about the budget.

Due to the ongoing projected budget gaps faced by the City, the narrow vote associated with the 2025 Budget, and the feedback of 1st Ward residents about the City’s financial situation, the 2025 Budget Blog will run throughout the year.

The original budget content is featured lower on the page, and the newer budget content will be placed near the top of the page.

Chicago Public Schools Pension Matter: March 28, 2025

Alderman La Spata and the 1st Ward Office have received a document explaining in full the Chicago Public Schools pension matter, from the perspective of the City. This explanation outlines some of the details of a lengthy intergovernmental agreement between the City and CPS, to require reimbursement of the City for the CPS share of the MEABF pension. A portion of the MEABF pension includes CPS personnel, as well as City personnel. The City of Chicago uses a budgeting tool called TIF Surplus, where unencumbered Tax Increment Financing proceeds are returned to the taxing bodies in proportion to their legal share of property taxes (for example, roughly 23% of your property tax bill goes to the City of Chicago, so for every $1 in TIF surplus, the City receives around $0.23). In conjunction with the intergovernmental agreement, the City has sent increasingly larger TIF surplus amounts to other taxing bodies in recent years, instead of using those funds for economic development and infrastructure purposes as allowed by State Law. Each year from 2020 onward, the City typically collects more than $1 billion in TIF proceeds.

This week, Alderman La Spata signed on to a letter that includes members from across City Council caucuses, to discuss two specific proposals for ensuring City Council is involved in the budgetary resolution of this pension matter. The letter also urges Mayor Johnson to make the resolution of this jurisdictional dispute the top priority of the City’s State of Illinois legislative advocacy during the current legislative session.

Currently, the full impact of this $175,000,000 nonpayment on the City’s 2024 budget is not known, because the City is completing its legally required audit. When the Comprehensive Annual Financial Report is published in June or July, we should know more.

Reading Financial Documents: March 21, 2025

Last week, following resident feedback related to the recent bond issuance and corresponding vote, as well as notice of filings with the City Clerk of draws on the City’s revolving short term credit facilities, 1st Ward Staff met with staff of the Chief Financial Officer’s office and the City’s bond team, to discuss the City’s complex web of debt instruments and financing needs.

In discussing the City’s pension liability, it was noted that the City follows specific actuarial documents produced for each pension fund. The City’s net pension liability, last published in the 2023 Annual Comprehensive Financial Report, was reported as $37.2 billion. This is a daunting figure. However, by reading the actuarial documents, one can ascertain the length of time associated with the net pension liability, and how the net pension liability will proceed over time.

For pension analysis, the following documents are recommended:

Compared to private pensions, government pensions are allowed a certain unfunded ratio because governments have different functions and therefore different legal and financial assumptions than private corporations. So for example, when the MEABF pension unfunded liability is listed as $14.177 billion in 2023, that is based on the entirety owed to all assumed participants based on actuarial assumptions (ex., time spent working, life span, timeframe for benefits paid out, etc.). The MEABF therefore provides a 50-year “ramp”, whereby payment requirements are projected 50 years into the future to achieve a 90% funded ratio.

1st Ward Staff will continue to work with the office of the Chief Financial Officer and other City employees to discuss these complex issues of municipal finance, so we can continue to communicate with you about how the City’s budget works.

Archived: March 12, 2025

For page management purposes, the following content has been archived into a single document:

  • Infrastructure bond analysis (February City Council vote)

  • City Treasurer Statement (February 7, 2025)

Updated Budget Blog: Where do we go from here? Pensions and Budget History

What is Debt? (approved and posted February 7, 2025)

Over the last five years, the City has substantially lowered its total debt service owed. This debt service typically has governmental functions, like infrastructure, and business-like functions, like airports, sewer, and water functions. This blog surveys the shape of the City’s debt over the last five years, discusses the infrastructure assets that cover the debt, and questions what lower debt service owed could mean for infrastructure investment

Budget Comparison: From 2004 to 2025 (approved and posted February 7, 2025)

On the City’s 2025 Budget Forecast, the City outlines nearly three decades of pension payments. The year 2004 marked one of eleven consecutive years (2004 - 2014) in which the City’s pension contribution struggled to keep pace with inflation, let alone its required funding ratio. The shape of government was also quite different in 2004: the City seemingly implemented fewer grants, and also had a different balance between its infrastructure services departments. In 2025, by comparison, infrastructure services shifted balance toward a focus on Aviation (including projects such as airport modernization), which departments like Streets & Sanitation appear to comprise a smaller percentage of governmental appropriations. This blog includes a 30,000 foot overview of both budgets, and concludes that further studies of the City’s infrastructure services are needed, to assess how those services have changed over time.

Original Budget Blog: Published in autumn 2024 for the 2025 Budget Season

Following the success of last year’s Budget Blog, which provided a relatively succinct way to communicate with residents about the complicated topic of the City Budget, 1st Ward Staff are once again maintaining a blog about the budget.

Departmental Hearings
2025 departmental hearings will kick off on Wednesday, November 6. This year, Ald. La Spata is committing to highlighting at least one 1st Ward resident’s question during his second round of questioning (5 min). Submit any questions you may have to info@the1stward.com. Click here to view the daily lineup of departmental hearings. Each hearing will be livestreamed via the Office of the City Clerk’s website.

Prior to a department’s hearing, Ald. La Spata sends “through the Chair” (TTC) letters with data specific questions, which gives the department time to find the data and doesn’t cut into the Alderman’s time during his round of questioning. You can learn more about TTC letters and review 2025 letters here.

Structural Vacancies (November 7, 2024)

For each Committee on Budget and Government Operations hearing, each department provides a budget book that includes specific human resources, employment, and vacancy information. 1st Ward staff studied vacancies between 2024 and 2025 departmental books, and found 292 vacancies that may have appeared in both the 2024 proposal and 2025 proposal. These positions cost nearly $24 million in the Corporate Fund, which is where the City’s budget gap is. Yet, studying these positions is not simply important to consider cutting persistent vacancies: it also demonstrates where vacancies could hurt the City, in everything from public safety investigative positions to technology development and procurement positions that could boost the City’s economy.

Finance General (November 7, 2024)

One of the largest lines in the entire budget is the Finance General category. This is a type of catch-all account for many different types of personnel costs for the City. The good news for the 2025 gap is that the City has reduced the Corporate Fund “Finance General” line by approximately $300 million. However, there remain some large lines in this aspect of the budget that Alderman La Spata and staff are continuing to scrutinize.

Applying Budget Forecast Improvements to Future Budgets (November 1, 2024)

Between the publication of the 2025 Budget Forecast and the 2025 Budget Overview & Recommendations, the City found improvements in its forecasted revenue projections and also clarified the extent to which additional pension payments were included in the forecasted budget gap. The next Budget Blog demonstrates these improvements, and compares these improved assumptions with the 3-year outlook originally published in the 2025 Forecast.

Mayor’s Budget Address (October 30, 2024)

The City’s Budget books are live:

Chicago’s 2025 budget proposes 744 Full-Time Equivalent (FTE) positions cut. This document lists the top line cuts per department.

The City of Chicago’s 2025 budget has been published, and 1st Ward staff are highlighting key aspects. Significant investments are planned for public safety ($213.6 million), community and gender-based violence prevention, mental health, and youth employment, although specific funding sources are not always clear. To close the $5.6 billion corporate fund gap, measures include projected savings, efficiencies, and a substantial $300 million property tax increase intended to relieve pension subsidies. Additional analysis to come.

What does the revenue forecast say about the economy? (October 28, 2024)

Prior to the expected release of the Budget on Wednesday, October 30, 2024, let’s take one more look at the 2025 Forecast. By looking at historical data, 2024 collections, and the 2025 forecast, it is possible to assess the City’s expected outlook for the economy in the next year. In this case, a negative forecast expectation for Chicago may be exacerbating the City’s expected budget gap.

What is the Budget Gap? (October 22, 2024)

The published budget gap in the 2025 Budget Forecast is nearly $1 billion, which is quite a daunting figure. Yet, two years ago the City forecast was much less extreme, with a forecasted 2025 gap of approximately $550 million. While that number is not small, it’s much less than the current gap. What changed in two years? This budget blog tackles some of the line items forecasted by the City, to show how Alderman La Spata and the 1st Ward staff form budget priorities. This blog discusses issues and forecasts related to pensions, projected Building Permit and Business License fees, and services for our new arrivals seeking asylum.

You can read more here, and with the City’s Comprehensive Annual Financial Reports and Budget Forecast documents for 2023 and 2025: