Chicago ended 2024 with a $161M deficit

Chicago Tribune

30-06-2025

Mayor Brandon Johnson's already gaping budget hole will be even tougher to fill heading into next year as City Hall officials on Monday closed the book on the 2024 fiscal year, showing the city's general fund was $161 million underwater.
Major sources of revenues in the city's general fund came in far lower than anticipated, most notably a $175 million pension payment that City Hall wanted Chicago Public Schools to pay back but didn't, and a $165 million drop in personal property replacement taxes from the state. In all, general fund revenues in the $16.77 billion budget were $378 million lower than the city expected.
Those hits essentially drained the city's 'unassigned fund balance' — a slice of reserves that have helped deflect some big budget hits. The city's overall reserve balance at the end of 2024 stood at more than $1 billion, down from a high of $1.94 billion at the end of 2022 when the city was flush with federal pandemic relief dollars. The biggest drawdowns on those reserves were to make extra pension payments designed to keep the four major pension funds afloat and reduce payments in the long term.
Although city budget officials argued the balance in those reserves was on par with what it was before the pandemic and that the city still had plenty of cash on hand, ratings agency Fitch warned earlier this year that the city has a 'dwindling cushion' in its overall reserves.
'Even in the face of extraordinary financial pressures, we stayed focused on making critical investments in our people and our communities to lay the foundation for the long-term fiscal stability of our city,' Johnson said in a release that touted his $1.25 billion housing and economic development plan and other community development grants. 'This year's ACFR reflects not only the realities of our current financial landscape but also our commitment to putting people first.'
2024 expenditures were $217 million lower than projected, helping stem the tide of last year's revenue underperformance.
'General government' costs were about $400 million below projections, including a much smaller subsidy for paying down other debts. Chief Financial Officer Jill Jaworski said those 'significant reductions' in spending were 'very effective.'
Those savings were, however, undercut by $207 million in additional public safety costs that have plagued Chicago's budget year after year. City officials said overtime costs at the Chicago Police Department and big court settlements were the main drivers.
The figures were released Monday by City Hall officials as part of the Annual Comprehensive Financial Report, or ACFR, which is the final tally of expenditures and revenues from the previous year that the city publishes every summer. Johnson's budget team briefed reporters and members of the City Council on the figures Monday afternoon, a kickoff to the fall budget season.
In detailing the city's finances, the City Hall leaders were optimistic CPS would reimburse the city for last year's $175 million pension payment for nonteacher staff. The proposed payment by CPS was controversial as former CPS CEO Pedro Martinez said it was financially imprudent for the school district, an opinion that hastened his eventual departure.
Current CPS leadership is 'being realistic about what their actual budget gap is, and it does recognize this commitment toward' the payment to the pension fund, budget director Annette Guzman said. Macqueline King, the district's interim leader who took over for Martinez, tacked on that pension cost when announcing the district's roughly $730 million deficit last week.
The city hopes to largely offload 'entanglement' costs as CPS moves further away from mayoral control.
'We are the only city in Illinois who pays for the pension contributions for non-employees,' Jaworski said. 'It's a significant cost to us and it's one that we don't control.'
The city's revenue shortfall was expected, said Ald. Pat Dowell, chair of the City Council's Finance Committee. She praised the city for controlling costs when it anticipated the shortfall and improving its pension standing. Work on the city's next budget is well underway, she said, touting an effort to bring down police and fire costs by getting more sidelined personnel back to work.
Aldermen are already exploring several new revenue streams to help fill what Johnson has hinted would be a deficit of more than $1 billion, including light pole advertising, higher towing and storage rates, and efforts to authorize video gambling terminals within city limits.
Johnson's budget team on Monday previewed a study they plan to release next month showing that the benefits of introducing the gambling machines to city bars and restaurants would be minimal at best and would likely in job cuts at the city's only casino, Bally's.
While some aldermen and state legislators have pointed to the terminals as a relatively painless revenue source, opponents have argued that the change would cannibalize business at the city casino, where a portion of the revenues is dedicated to paying down police and fire pension costs.
City officials said their outside study estimated the terminals would bring in, at most, just $200,000 in net revenues for 2026 and $12 million in 2027. Total gambling revenues could also fall, they estimated, on top of the city likely losing a guaranteed $4 million annual 'community payment' under their current agreement with Bally's. Hundreds of jobs at Bally's would also be cut, they said the study estimated.
There were some silver linings in the briefings: through this May, expenditures in the city's corporate fund were $79 million lower than expected, while revenues were $79 million higher.
And the city's four pension funds saw slight improvements, the report showed.
In 2024, their combined 'funded ratio' — the percentage that compares the funds' total holdings against their total liabilities — was 26.2%, up from 24.8% the previous year. Across the four funds, however, the total unfunded liability was $35.8 billion, slightly down from last year when it was $37.2 billion.