CITY HALL — Chicago is dealing with a projected $1.15 billion deficit for 2026, Mayor Brandon Johnson and his price range crew introduced Friday — on prime of an nearly $150 million spending hole for the remainder of 2025.
Friday’s price range forecast is among the first main steps in the town’s intensive annual price range course of, which can embody the discharge of official spending suggestions from Johnson in October adopted by weeks of vetting within the Metropolis Council.
The $1.15 billion quantity is barely increased than the $1.12 billion 2026 projection shared final yr. It comes as the town additionally faces a $146 million hole for the remainder of 2025, which officers stated stems largely from underperforming revenues and the uncertainty over receiving a pension reimbursement from Chicago Public Colleges.
Throughout a briefing with reporters Friday, Johnson acknowledged the price range hole presents “some onerous truths” for the town however shared few particulars about how he plans to handle the difficulty.
“The drivers are clear: rising personnel, well being care and pension prices, mixed with the lack of one-time helps that beforehand helped stability the price range,” Johnson stated. “Not like prior to now, when forecasts typically understated the scope of the issue, this administration, after all, is selecting to be clear. We’re not hiding the problem.”
The forecast gives three projections that rely upon quite a lot of financial and budgetary elements: constructive, baseline and unfavourable. Baseline is what the administration believes is almost definitely to occur.
Underneath a “baseline” projection shared Friday, subsequent yr’s price range proposal will not be anticipated to to incorporate a property tax enhance.
Johnson final month stated he had dominated out a property tax hike for 2026. The mayor has to date not raised property taxes whereas in workplace, though final yr he initially proposed a $300 million enhance that was unanimously rejected by the Metropolis Council. Smaller proposals had been additionally defeated.
Additionally up within the air is a projected $80 million in income tied to a 1 % grocery tax, which is being phased out by the state. As individuals throughout the nation reported skyrocketing meals prices, Gov. JB Pritzker stated the removing of the tax would “make journeys to the grocery retailer somewhat simpler.” State lawmakers authorized the removing of the statewide tax final yr as a part of Pritzker’s 2025 price range plan and the change goes into impact Jan. 1, 2026.
However the state legislature did permit particular person municipalities to impose the tax on their very own — one thing Johnson and his price range crew hope Metropolis Council will approve by an Oct. 1 deadline to levy the tax for all of 2026.
The price range forecast’s baseline outlook, nevertheless, solely elements in $40 million from the grocery tax subsequent yr, price range director Annette Guzman stated. If Metropolis Council misses the October deadline and passes the tax later this yr, the town might solely acquire it for the second half of 2026.
The grocery tax confronted some opposition from aldermen this spring and summer season, however it has but to be formally debated in Metropolis Council.
“Our baseline state of affairs displays that it’s handed as a part of the price range, and the unfavourable state of affairs displays that it’s not handed in any respect by Metropolis Council,” Guzman stated on Friday. “For the baseline, solely $40 million is included throughout the 2026 price range.”
Friday’s price range briefing got here simply hours after Chicago’s Board of Training authorized a 2026 price range for CPS that averted cuts to the classroom but additionally didn’t embody a mortgage to cowl a $175 million municipal pension cost that might be handed on to the town.
That is the second yr in a row the pension cost has been on the heart of a price range standoff between Johnson and the varsity board. Final yr, it set in movement a sequence of occasions that led to the ouster of former CPS CEO Pedro Martinez.
The 2026 baseline price range projection doesn’t consider reimbursement of that $175 million, Guzman stated.
Johnson this yr has pledged to pursue progressive income sources that tax the “extremely wealthy” to assist stability Chicago’s price range. One choice might be the reinstitution of a company head tax, which might cost a small greenback quantity per worker for corporations over a sure dimension.
Johnson in July informed reporters the top tax is “an choice,” and likewise stated his crew was an concept known as “cost in lieu of taxes,” also referred to as PILOT, which asks tax-exempt establishments to make voluntary funds to the town.
The mayor and his price range crew on Friday additionally didn’t decide to shedding metropolis workers to stability the price range — one thing quite a few alderpeople pushed for final yr. The town is presently in the midst of a hiring freeze for “private security, non-revenue producing” roles via the top of 2025, Guzman stated.
“There are methods by which we are able to create efficiencies with out essentially laying individuals off,” Johnson stated. “However once more, it’s too early to have the ability to make that dedication. Simply know, as I’ve stated from the very starting, that the extremely wealthy and our massive firms need to do extra.”
For a lot of alderpeople who shall be tasked with vetting and voting on Johnson’s spending plan this fall, final yr’s rancorous price range course of stays all too recent.
The 2025 course of started later than ordinary and included an preliminary property tax hike proposal that was whittled down from $300 million to $150 million to ultimately nothing. It handed by a slender 27-23 vote.
Hearken to the Block Membership Chicago podcast:
