Chicago ended 2024 with a $161M deficit
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.
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New York Post
4 hours ago
- New York Post
Michael Goodwin: Cuomo remains NYC's best shot to keep socialist Mamdani from being mayor – or the city will never be the same
He lost the primary by a stunning 12-point blowout, but as strange as it sounds, the ball is again back in Andrew Cuomo's court. Is he going to run a serious campaign in the general election, or is he ending his political career with a humiliating defeat? That's the key question for him, but it's also vital for the November election. Cuomo's answer is crucial because the Democrats' full-blown socialist nominee, Zohran Mamdani, is a heavy favorite to win. If he does and is able to implement even half of his radical agenda, New York will never be the same. It's teetering under the flawed leadership of Mayor Adams, but Mamdani is a human wrecking ball whose City Hall would make these troubled days look like a Golden Age. His policies would destroy Gotham's economy and shred the fragile social fabric. Nepo baby disaster His plan to freeze rents on 1 million privately owned apartments would turn the housing crisis into an unfixable disaster. What private developer is going to build apartments if it means losing money on the whims of a nepo-baby mayor who never held a job in the private sector? And if government becomes the major builder, look to the perpetually troubled Housing Authority projects for a vision of the hellscape future. Follow The Post's coverage of the NYC mayoral race Mamdani's racist plan to tax white-owned property higher than others and his support for antisemitic policies are beyond the pale. On top of his backing for the BDS movement, his refusal to condemn the odious phrase 'globalize the intifada' offers tacit support for violence against Jews in Israel and around the world. He's also a 33-year-old elitist who joined the 'defund the police' mob and has talked about dismantling the jail system. Next to him, Manhattan District Attorney Alvin Bragg is a throw-away-the-key champion of law and order. New York has never had a mayor so far out of the mainstream. The closest was Bill de Blasio, and Mayor Putz was the worst leader the city had in 50 years. Which brings us back to Cuomo. The November ballot essentially comes down to a four-person race. In addition to Mamdani on the Dem line, Cuomo and Eric Adams hold independent lines, and Curtis Sliwa is the GOP nominee. Cuomo I believe, is the only one with a realistic chance of defeating Mamdani. Yes, yes, I know that's a hard sell in the immediate aftermath of the thumping the former governor suffered last week. Mamdani beat him by 7 points on the straight vote counting, and the final margin grew to 12 points when the ranked-choice votes were tabulated. Full of regrets The difference reflected the cross-endorsement arrangements Mamdani made with like-minded lefties that enabled him to pick up much of their support when they were eliminated. But the key was the record turnout of 100,000 new voters from ages 18 to 30, who went overwhelmingly for the Queens lawmaker. Polls didn't pick up the surge until the very end, with Cuomo consistently a dominant front-runner since March. One result was that Cuomo was too cautious, acting like an incumbent playing not to lose instead of playing to win. His Rose Garden strategy of skipping candidate forums and granting few interviews reflected what the polls were saying: that his lead was safe. It wasn't and I'm told he's now full of regrets and admits he ran a terrible race. He acknowledged as much in a brief statement to me late Tuesday, in which he said the 'buck stops with me' and that 'I should have focused on a simpler affordability message even in these complex times.' After saying that 'Effective social media is paramount,' he added, 'We're going through the data, but there's no question a fall campaign needs to be a different effort informed by the lessons of this one.' His points reflect the fact that his ads, including those of his well-funded PAC, were good enough in a vacuum, but never countered his opponent's appeal to new voters. In addition, Cuomo was saddled with his own disgraceful exit from Albany four years ago over sexual harassment allegations. He also carries the baggage of his fatal Health Department order requiring nursing homes to take COVID patients, and he never owned and apologized for either, apparently assuming they were too far in the past to matter. He's wrong, and to run in the fall, he must express honest regret to voters. Poll optimism Still, there is already one poll looking ahead that is giving his team some optimism. It was conducted in the first two days after the primary, but got little attention. It deserves more. The Cuomo-aligned Honan Strategy Group found that, going into the general, Cuomo and Mamdani are essentially tied at 39%, with Adams at 13% and Sliwa at 7%. 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Yahoo
7 hours ago
- Yahoo
How major new housing reform will affect homebuilding in California
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The Hill
7 hours ago
- The Hill
Speaker Johnson: Inclement weather is ‘part of the problem' for House votes on megabill
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