In August, Mayor Johnson unveiled his 2027 budget forecast. Going into 2027, the City of Chicago is projected to end the 2026 fiscal year with an $85.1 million shortfall and an $882.4 million budget gap in 2027. 

The main driver of the $85.1 million shortfall is a series of untested new revenue streams that a group of alderpeople proposed and passed, but that failed to materialize. The projected $85 million gap is less than the anticipated $130 million shared earlier this summer (and covered in detail in a previous newsletter). The Office of Budget Management attributes the shrinking budget gap to revenue streams performing better than expected and lower departmental spending. In August, Mayor Johnson announced a plan to partially fill the City's projected $85 million budget gap by refinancing eligible 10-year-old city bonds, which is estimated to generate $65-$71 million in savings this year. 

Rising costs and structural imbalances in revenue sources are the main drivers of the projected $882.4 million budget gap in 2027.  While the Office of Budget Management anticipates local tax revenue to remain resilient in 2027, other financial obligations are set to increase, contributing to the projected $882.4 million budget gap. Bond payments and lawsuit settlements are the primary drivers of the projected budget gap, with expenses expected to increase by $334.6 million in 2027. Other contributing factors to the projected budget gap include inflationary pressures driving up energy and commodity prices, pension obligations, and rising costs tied to contractual services. 

In 2026, City Council approved the largest TIF surplus to close its budget gap. In order to pass a balanced budget, the group of alderpeople who passed the alternative budget included $89 million in outstanding debt as a revenue source. Though the City made attempts to sell the outstanding debt, banks ultimately withdrew their offers due to concerns about reputational risks and unsecured debt, or debt that lacks collateral backing. Even if the $89 million materialized, it is still a one-time solution that fails to address creditors' concerns about structural revenue. Other revenue streams included in the alternative budget—such as video game terminal revenue, augmented reality revenue, and advertising revenue—have either yet to be realized or have underperformed, putting City Council and the Johnson administration back to the drawing board entering 2027 budget talks. 

In September, a group of 29 alders—the same group that spearheaded the 2026 budget—issued a letter to Mayor Johnson stating their ongoing opposition to any head tax or property tax, and instead called on spending cuts to balance the budget. The City's credit rating has been downgraded in recent years for not including enough structural revenue generators in the budget and instead relying on one-time funding sources, such as large TIF surpluses. City Council would have to eliminate several departments in their entirety to close this year's budget gap without any new meaningful and viable revenue sources. Alderwoman Hadden supports efficiencies that benefit Chicagoans while also identifying progressive revenue streams that aren't balanced on the backs of Chicago's working families. 

Mayor Johnson is expected to give his budget address and unveil his budget proposal during the October 14th City Council meeting. Alderwoman and her team will be reviewing reports closely as we head into budget season. Keep your eye on this space for more information and opportunities to weigh in as Mayor Johnson's 2027 budget proposal is unveiled.