As he crafts Chicago’s 2025 budget, Mayor Brandon Johnson has less and less time and not enough money.
The mayor faces a nearly $1 billion budget gap, an increasingly unruly City Council and a tightened timeline to accomplish elected officials’ most essential task. The daunting challenge has made some aldermen wary of an unlikely, but troubling worst-case scenario: Could the city fail to pass a budget by the state’s Dec. 31 deadline?
Johnson and the council will likely get it done, as the city has every year. But if a budget takes too long amid the accounting nightmare, the mayor’s political stumbles and a ticking clock, it could spell disaster.
“If it did not pass in time, we would end up with bills not getting paid,” Ald. Maria Hadden, 49th, said. “That is completely unacceptable.”
Experts say failing to pass a budget in time could quickly threaten the city government’s ability to carry out many services and pay its workers. It could harm the city’s credit rating and jack up costs for borrowing money while deeply shaking the faith Chicagoans have in their elected officials.
Those pricey pitfalls should serve as a warning as the mayor and aldermen start to work out a budget in earnest, said Ralph Martire, executive director of the Center for Tax and Budget Accountability, a nonpartisan fiscal policy think tank.
“It is in no one’s interest not to pass a budget deal,” Martire said.
After the deadline, ‘murky waters’
Asked what happens if the City Council and mayor fail to pass a budget by the state-mandated deadline, most aldermen were unsure.
“I’ve never been through that before,” said Vice Mayor Ald. Walter Burnett, 27th, the City Council’s longest-tenured member.
Budget policy experts agreed that failing to meet the deadline would push the city into uncharted territory. “It would be real murky waters,” Martire said.
“It has never been tested as far as I know,” he added. “If there is no budget, there is no spending authority. And if there is no spending authority, then it is a real challenge for the city to maintain its core operations.”
The city would be able to keep collecting taxes without a budget, Martire said. He also said Chicago’s government would have some leeway to continue spending money in the first quarter of the year, but added it is unclear how much, since the law allowing them to do so is untested.
A comparable impasse is the state’s two-year budget crisis under former Gov. Bruce Rauner, Martire said. That stalemate damaged Illinois‘ bond ratings and continues to leave the state with unfilled human services positions, he added.
And alongside the ability to function well in the short and long term, “faith in the process of government” is at stake, Martire said.
“Governments cannot operate without budgets. It is sort of the core thing elected officials have to do,” he said.
Chicago got close to missing the Dec. 31 deadline during the so-called Council Wars of Mayor Harold Washington’s time in office, former alderman and retired University of Illinois Chicago professor Dick Simpson said. During that period, Ald. Edward Burke would introduce an alternative budget each fall — a move the restive City Council could theoretically try again this year, but has so far not undertaken.
“But (Burke) could not overcome the veto. And at the last minute, they would compromise and come up with a budget so the city could keep operating,” Simpson said.
Such a late save would come together this year if needed, Simpson expects. But if the city failed to pass a budget on time, it would be able to spend money left over in its coffers from 2024 and would likely have some leeway before bills must be paid, but would not be able to pay bills that require new money, he said. It would be difficult for the city to get much-needed cash tied to its anticipated tax revenue, he added.
“Things would keep running for a little while. The water does not cut off on Dec. 31,” Simpson said. “But it would be a dire situation.”
Simpson is even more troubled by the possibility that a budget does pass, but with steep service cuts, he said. He fears less frequent garbage pickup, less funding for poverty-focused programs and reduced pension payments.
Despite multiple interview requests to different city departments, including the mayor’s office and his finance and law departments, the Johnson administration declined to discuss what happens after the Dec. 31 deadline.
Credit ratings agencies will also be keeping a close eye on the city’s budget process. Agencies could reconsider Chicago’s credit worthiness if a budget stalemate affects basic services or shifts how the city’s “management effectiveness” is perceived, Fitch Ratings analysts Ashlee Gabrysch and Michael Rinaldi said.
“It depends on the length of the impasse,” Rinaldi said. “Not enacting a budget creates uncertainty.”
However, the analysts said they are more concerned with how, not if, Chicago’s budget gap is closed. They will closely watch whether the budget continues advanced pension payments, uses outlandish revenue assumptions, fills holes using reserves or opts for “sustainable, recurring measures,” Rinaldi said.
“There is a large question that looms in terms of whether the city decides it is going to make tough decision this year or whether it is going to resort to prior bad practices of one-time fixes,” Gabrysch said.
An unruly council, a challenging budget
The race to sort out Chicago’s 2025 budget is already running behind. Johnson had initially planned to unveil his budget in mid-October, but late last month postponed the scheduled presentation to this upcoming Wednesday.
Questioned about the new timeline, Johnson argued it is “not a delay” because it falls before the Dec. 31 statutory deadline. The postponement might be a tactic, Ald. Gilbert Villegas, 36th, said. Villegas hypothesized that labor groups could try to pressure aldermen to hike loans, taxes and fees to avoid cuts during the shortened timeline.
“But I think they are underestimating members,” he said, adding that he wished aldermen would make their own budget to heighten their ability to negotiate.
The mayor’s administration has signaled for months the city could need to make deep cuts or add major revenue to balance the city’s books. He has told department leaders to undertake the exercise of modeling layoffs — though he describes such cuts as a “dramatic and severe” last resort. And he has said he is open to increasing property taxes, a sure-to-be unpopular move he campaigned opposing and avoided last year.
Layoffs would draw blowback from Johnson’s key labor allies. An inability to spend could turn off his progressive aldermanic partners, who want big investments in the bold new policies he has long promised. New taxes are likely to incur heavy resistance from the more moderate and conservative wings of the City Council.
And because of the postponement of Johnson’s budget introduction, he has far less time to iron out the kinks. The currently scheduled December vote on the budget would be the city’s latest since 2009.
That tight timeline will only made more difficult by Johnson’s tense relationship with the council, where a growing batch of defiant aldermen have teamed up in new, broad coalitions to oppose key decisions made by the mayor. They knocked off his pick for Zoning Committee chair, tried to force his hand to keep the ShotSpotter system and are banding together to challenge his school board overhaul.
Ald. William Hall, 6th, tasked with Johnson to lead the City Council’s charge in finding new revenue, said he is not bothered by the challenge.
“This mayor is moving at a pace that is about sustainability, and not just knee-jerk reactions, not just adding band-aids,” Hall said.
Still, Hall predicted that the mayor’s “obstructionist” City Council opponents will initially clamor against Johnson’s budget. But he expects aldermen will come together to pass a spending package before the deadline.
“Of course they’re going to put on their best Academy Award-winning performance,” Hall said. “I think once my colleagues sit down and think close and hard about the faces and the people that are dependent on them, things will settle down.”
Some aldermen have already begun looking at the possibility of using a “continuing resolution” to create a stopgap budget if needed, Ald. Bill Conway, 34th, said.
“If it got to that — and I hope it does not — we would have to do it in a way so that there is not a break in essential services,” Conway said. “But this would be terribly disruptive to the city.”
The budget is a product of finance expertise and technical skill, said Hadden, co-chair of the council’s Progressive Caucus. But it is also a product of diplomacy and negotiation, she added — things she said are at a “deficit” in City Hall right now. The City Council does not have access to budgeting resources, so it falls on the mayor to come up with the foundations of a budget, Hadden said.
“It’s probably the biggest piece of compromise legislation that the mayor’s office works on every year,” she said.
Winning aldermen over to that compromise could be made more difficult by the recent back-to-back resignations of the people tasked with leading Johnson’s City Council lobbying efforts. But aldermen will do everything they can to make sure something passes, Hadden said.
Everyone on the City Council understands that there will be “some major contention,” Ald. Chris Taliaferro, 28th, said. He is anxious for a budget to pass and most fears the possibility of cuts to policing, he said.
But he does not know what to expect if the New Year comes and the city has no budget.
“I have never crossed the bridge.”
