Chicago dealing with record budget shortfall – so what's next?

CHICAGO - Nearly eight months after the coronavirus hit the nation, struggling cities like Chicago saw a huge drop in tax revenues.

Empty streets meant no money from sales taxes, and now it appears the city will not get any help from the federal government.

The city is dealing with a record budget shortfall and that could mean big changes are coming.

For city taxpayers, it could very likely mean paying more. For some city departments and agencies, it could mean layoffs.

With an $800 million deficit in this year's city budget, a projected $1.2 billion deficit next year and zero progress on a federal aid package that Mayor Lori Lightfoot was counting on, a grim update was announced Tuesday from City Hall.

“Every single meeting has been painful. Every single one. Every single one. Thinking about the hardships that our residents are going to have to endure, particularly our personnel,” said Mayor Lightfoot.

While she did not confirm tax hikes and layoffs are on the horizon, a combo of the two is the likely scenario given the city's dire financial situation, exacerbated by the pandemic.

"There's no doubt that the city of Chicago's budget is a mess,” said Fox Business contributor Phil Flynn.

Still, Flynn says any federal aid package should not be about bailing cities out.

“We're talking about a relief bill here. We're not trying to relieve the cities here. We're trying to relieve the people at home,” he said.

Mayor Lightfoot says given the circumstances, the City Council should be prepared to vote on the toughest city budget they have ever had to consider.