Chicago faces $982M deficit in 2025 budget forecast: 'Significant challenge for our City'

CHICAGO - Chicago Mayor Brandon Johnson released the city's 2025 Budget Forecast on Thursday.

The city's fiscal teams estimated a year-end budget deficit of $222.9 million for 2024 and a projected 2025 fiscal year budget gap of $982.4 million.

Johnson's office said the gaps are largely due to personnel, pension and contractual costs, and a decrease in specific revenue streams and rising costs.

The forecast predicts a $16.1 million increase in contractual service expenses from 2024 levels, driven by inflationary pressures and upgrades in information technology services.

Johnson emphasized the need for strategic planning and collaboration, as rising costs and declining revenue streams put pressure on the city's finances. 

"The 2025 Budget Forecast presents a significant challenge for our City, with a nearly $1 billion gap that we must address thoughtfully and strategically," said Johnson. "My administration is committed to finding solutions that balance fiscal responsibility with our obligation to invest in the people of Chicago. Together, we will ensure our budget reflects the values of equity, fairness, and shared prosperity."

The Illinois Policy Institute said property owners will feel it.

"It's going to be city property taxpayers because that's the largest own source revenue for the city, whether it comes to the city budget or the CPS budget, which is another looming question. But that's going to be where this if felt the most," said Bryce Hill, Director of Fiscal and Economic Research at the Illinois Policy Institute. 

The 2025 budget will mark the sixth year for the city's police and fire pensions and the fourth year for the Municipal and Laborers pension. The city said it plans to make advance pension payments totaling $272 million in 2025 to address long-term pension liabilities. 

The budget also shows that the city did not receive the $175 million reimbursement for pension contributions for staff members at Chicago Public Schools. The Illinois Policy Institute said that money in the scheme of all of this is small potatoes when you look at the deficit.

"We've seen the past two mayors on their way out the door, Lightfoot and Emanuel, both advocate for pension reform to help save the city's budget, because they saw these unsustainable costs coming. Now, they're coming to bear. Brandon Johnson really needs to leverage his position as the most influential local leader, to lead the fight for pension reform because this is coming for Chicago and its coming for municipalities all across the state," said Hill. 

The mayor reassured residents that his administration is committed to finding balanced solutions that invest in Chicago’s future.

For more on Chicago’s 2025 Budget Forecast, click here.