How about you also stop spending?
Chicago Budget Director Annette Guzman announced the city will implement a hiring freeze due to a massive budget deficit.
The city will also limit employees’ “non-essential travel and overtime expenditures outside of public safety operations.”
This line from the budget forecast has me crying: “The primary driver of the current year financial situation stems from lower revenues and not from higher spending.”
Um, when your spending is higher than your revenue, then yes, it’s from higher spending whether you added more to your budget or not. When your spending exceeds your income, you cut new and already established spending.
You have to stop spending. Hiring freezes and limiting employees’ expenses won’t make much of a dent.
The city forecasted a $222.9 million deficit for 2024:
The City currently projects the Corporate Fund to end 2024 with total expenses exceeding revenues by $222.9 million or 4.2 percent. The primary driver of the current year financial situation stems from lower revenues and not from higher spending. The revenue gap is driven by two primary factors: State Personal Property Replacement Tax (PPRT) revenue from business income and reimbursement revenue for pension payments made on behalf of Chicago Public Schools. Together, these two items account for more than 80 percent of the current year revenue imbalance. While these external factors drive revenue down, local tax revenue in the City remains resilient and is currently forecasted to outperform budget assumptions by nearly 1 percent. Nevertheless, to respond to this potential deficit and continue on our path towards fiscal sustainability, the City is taking action to maximize existing resources and further manage spending.
Chicago has a $982.4 million budget deficit for 2025:
Based on current resource and expenditure projections of existing operations, the City estimates a 2025 Corporate Fund gap of $982.4 million. This gap is driven by both revenue and spending factors. For revenue, the factors driving underperformance in 2024 are assumed to continue into next year. For spending, factors include rising personnel, pension, and contractual costs, as well as the cost to care for new migrants arriving to the city. The 2025 projection for these expenses assumes salary and wages will grow based on required and estimated contractual wage and prevailing rate increases, as well as cost of living adjustments for City employees, and updated pension contributions based on the most up to date actuarial reports and calculations. Personnel expenditures are expected to grow by more than $304.4 million in 2025, totaling $3,661.6 million.
Yes, raise taxes. That’s always the answer.
Last week, Mayor Brandon Johnson said the city and people must make sacrifices.
I’ll believe it when I see it. Johnson and his cronies will likely stick to raising taxes and implementing new fees before they cut anything. Johnson already floated raising property taxes.
People have been fleeing Chicago and Illinois because of high taxes, and raising property taxes will only make the situation worse. Cook County already raised property taxes by 4% in June.
Businesses do not pay most of the property tax revenue. Instead, 86.5% of the revenue comes from households.
Part of the deficit comes from spending money on illegal aliens. Officials hope grant money will cover that portion:
One unfunded expenditure contributing to the $982.4 million figure for 2025 is the $150 million Johnson’s administration is budgeting for migrant spending. Johnson set aside the same for 2024, but that estimate fell short by midyear and required an additional $70 million allocation from the state, though recent months have shown that the pace of new buses from Texas has slowed significantly.
Yes, because that’s just money from trees, right? Illinois and federal grant money comes from the taxpayer.
We cannot discuss Chicago without mentioning the unions, especially the beloved (sarcasm) teachers union! Chicago officials said Chicago schools have to face pains, too. Again, I’ll believe it when I see it:
The all-options-on-the-table statement also applies to compelling Chicago Public Schools to absorb a $175 million pension payment for non-teaching school employees.Guzman argued that a pension reversal is particularly important for CPS to assume its own costs as Chicago makes the transition from an appointed school board to a partially-elected, then fully-elected 21-member board.“Very soon, CPS will be its own … independent governing body separate and apart from the city. … For us to not control CPS or the Board of Education while having dollars that … are collected on behalf of the city go to another source is untenable,” Guzman said.“We are looking at every single option that allows us to … ensure that CPS fully takes on their obligations as we continue to disentangle our financial and operations commitments.”
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