Chicago – City Hall officials announced Thursday that the 2027 corporate fund – the city’s primary operating budget – is projected to run a deficit of $882.4 million. While the figure is lower than the more than $1.1 billion shortfall forecast earlier this year, it still represents a substantial fiscal challenge that the mayor and the City Council must address before the Dec. 31 deadline.
Why the Gap Shrunk
Mayor Brandon Johnson and his budget team attribute the reduced deficit to cost‑saving measures across city departments and stronger-than‑expected revenue from the online sports gambling tax and the Personal Property Lease Transaction Tax on cloud‑computing services. These efficiencies, they say, helped narrow the gap but do not eliminate it.
Revenue Pressures Remain
Despite the modest improvement, the city’s overall corporate‑fund revenue is expected to drop six percent – about $375 million – next year. The decline stems from the loss of one‑time sources such as Tax Increment Financing (TIF) surplus funds and “unrealized” revenues tied to a council‑backed plan to sell city‑owed debt to outside collectors.
Acting budget director Jonathan Ernst noted that the projected TIF surplus for 2027 could be around $330 million, with only $75 million currently earmarked for the city. The final amount may shift as the mayor prepares his budget proposal in October.
Rising Expenditures
Expenditures are set to rise by more than $500 million in 2027. The increase reflects higher bond and pension payments, scheduled cost‑of‑living adjustments for city workers, and anticipated settlements and judgments from police‑misconduct lawsuits – estimated at $400 million.
The city also plans to spend $364 million on a supplemental pension payment to help right‑size its pension obligations.
Political Tensions Over Revenue Options
Mayor Johnson’s administration remains at odds with a bloc of alderpeople over how to close the gap. Last year the City Council rejected the mayor’s proposed corporate head tax and passed an “alternative budget” that avoided the tax but introduced other revenue ideas.
While Johnson has not ruled out a property‑tax increase, he emphasized his commitment to “challenging corporations and those with means to put more skin in the game.” He pledged to continue pursuing “progressive” revenue options, a phrase his critics argue masks a reluctance to adopt broader tax measures.
Alderperson Scott Waguespack, a member of the council’s budget group, expressed frustration, saying the city “clearly has a deficit of leadership on the 5th floor that we will have to fix again.”
Refinancing and Potential Savings
In an effort to ease the shortfall, the mayor announced plans to refinance eligible 10‑year‑old city bonds, which could generate $65‑71 million in savings. Additional funds may come from remaining American Rescue Plan dollars and a grant‑management fund.
However, the council‑approved debt‑sale plan has stalled – only two banks responded to the request earlier this year, and both declined to proceed. The mayor’s budget team confirmed that the current forecast does not include any revenue from a potential debt sale.
Looking Ahead
Johnson will present a detailed budget proposal in early October, outlining how his administration intends to balance the books while maintaining essential services. The City Council will then debate the plan in the weeks leading up to the Dec. 31 deadline, with the February municipal elections adding political pressure on council members to take a clear stance.
Chicago residents can expect continued discussion on how best to fund city services without overburdening taxpayers, a debate that reflects the broader national conversation about responsible fiscal stewardship and limited government.
Original reporting: Block Club Chicago — read the source article.
