Chicago is freezing hiring and curbing other expenses to help close more than $1 billion in budget shortfalls through next year for the nation’s third-largest city.
Effective Monday, Chicago is limiting non-essential travel and overtime expenses outside of public safety spending, budget director Annette Guzman said in an emailed statement. Chicago is staring down an estimated $222.9 million deficit this year and another $982.4 million projected gap next year.
“These measures, while necessary, reflect our commitment to responsible fiscal management during a time of financial uncertainty,” Guzman said in the statement. City officials including the budget and finance teams “are working diligently to navigate these financial challenges and ensure the continued delivery of essential services to our residents.”
Mayor Brandon Johnson, who is crafting his second spending plan, is trying to make good on his progressive social and economic campaign promises while grappling with the city’s challenging finances. He will outline his budget — including how he plans to close the 2025 gap — in the next month or two. The Chicago City Council then will vote on the proposal by the end of 2024.
The back-to-back budget gaps come amid a drop in the so-called personal property replacement taxes from the state and because the city’s school district isn’t sending $175 million to pay a portion of pension contributions for its non-teaching staff that participate in the city’s municipal employee retirement fund, according to Guzman’s statement. Rising personnel, pension and contractual costs “alongside ongoing revenue challenges” are driving the shortfall next year, according to the statement.
The measures the city announced Monday are a starting point, said Joe Ferguson, president of the Civic Federation, a government watchdog. While the steps send the “right message” in response to the deficits, questions about how city departments will work with labor groups to deliver critical services with potentially less resources are still unanswered, he said.
“I am heartened by the fact that there is at least a recognition of the magnitude of this problem,” Ferguson said.
(Updates with comment from watchdog Civic Federation in last two paragraphs.)