The battle over the implementation of Chicago's 2026 budget became public on Thursday, when Mayor Brandon Johnson's administration held its fiscal year 2026 midyear budget hearing, which showed a deficit.
Following the hearing, the Budget Accountability Coalition, a group of aldermen who supported an alternative
"Today's hearing was another display of pure theater from the Johnson administration designed to distract from their failure to execute the FY26 budget as passed by City Council — which is literally their job," the coalition said in an emailed statement.
The aldermen accused the mayor of, among other things, issuing requests for information rather than requests for proposals to drag out the process of implementing efficiencies and bringing in new revenues proposed by the aldermen who developed the alternative budget.
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"While certain taxes are overperforming, like the personal property lease tax, social media amusement and responsibility tax (social media tax), and online sports wagering tax, other new revenue streams have not achieved their budget targets for 2026 due to a combination of operational complexity to execute (debt sale and advertising programs) and the impact of the tax adjustment on consumer behavior (shopping bag tax)," it said.
According to the document, budgeted revenues through May 31 totaled $2.17 billion, while actual revenue collections year-to-date came to $2.14 billion, falling $32.2 million short.
Chicago made $129.8 million of its budgeted $259.6 million supplemental pension payment in January, but the document says nothing about when the city plans to make the second half of this year's payment.
"The city's midyear budget revenue report accounted for the full supplemental pension payment," a spokesperson for the mayor's office said. "As in prior years, Cook County has indicated that property tax distributions are delayed, and the city is evaluating the timing of the supplemental payment as a result of those delays."
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The property tax delays
At the hearing, Budget Director Annette Guzman said the city's budget gap may hit $90 million this year and raised the prospect of cuts to the city's workforce, according to the
The midyear budget document notes personal property replacement tax revenues have declined significantly in recent years due to a state reconciliation process that cut tax distributions to the city, and to Illinois lawmakers diverting more PPRT revenues from municipalities to support state functions.
When those declines are factored in, PPRT revenues for the city will grow only modestly in 2026 before slowing in subsequent years, the document said.
State corporate income tax revenue has also begun to decline, the document said, and "federal policy changes that took effect in tax year 2025 that reduce corporate taxable income are expected to further suppress CIT revenues in 2026."
Chicago also lost $80 million in annual revenue when it failed to pass a local grocery sales tax after the statewide tax was eliminated.
Cannabis tax revenue, previously a bright spot for the city, has also declined. Collections dropped over 6% year-over-year and forecasts project flat or negative growth in the future, the document said.
The city's general obligation debt is rated Baa3 with a stable outlook by Moody's Ratings, BBB with a negative outlook by S&P Global Ratings, A-minus with a negative outlook by Fitch Ratings and BBB-plus with a negative outlook by KBRA.
