Fiscal watchdog groups are meeting with members of the Chicago City Council to craft an alternate spending plan for the 2026 city budget on the heels of a report from the Cook County treasurer's office that renders it even more unlikely Chicago will find recurring revenue from a property tax increase.
In its newly-arrived 2024 bills, Cook County saw a shifting of the property tax burden onto residents from businesses, especially in Chicago, according to
"Chicago's ability to tackle the structural budget deficit, estimated at $1.15 billion in 2026, is diminished to the extent that property tax increases are, practically speaking, off the table as part of an overall budget-balancing strategy," Scott Nees, a director at S&P Global Ratings, said by email.
S&P rates Chicago general obligation bonds BBB and revised its
Meeting with City Council members are the Civic Federation, the Civic Committee of the Commercial Club and "several former city budget and finance officials," the
"The Civic Federation always responds to requests for assistance, along with other leading civic organizations, and we've done so here at the request of a group of alders who have a perspective that is probably shared by a broad swath of alders: that the administration (of Mayor Brandon Johnson) has not shared information or provided sufficient access to city officials or to the city's paid consulting firm, Ernst & Young, to have a conversation about what is possible," Civic Federation President Joe Ferguson said.
Ferguson said the effort is unprecedented in recent times and is necessary "to come up with an alternative framework to essentially force the conversation that has been prevented to this point."
With property tax hikes largely out of the toolbox, S&P's Nees said "this leaves a gap in the budget that will need to be filled with some combination of other taxes, fees, or service reductions, and hence makes balancing outyear budgets even more challenging than it would be otherwise.".
For 2024 tax bills,
That represented an overall property tax increase of $872 million, or almost 4.8%, which was the 31st consecutive increase for county taxpayers, the treasurer's analysis found.
But the countywide trend has less serious credit implications for Cook County than Chicago's trends do for the city.
S&P Director Helen Samuelson said sales tax revenue performance has more relevant credit implications for Cook County because the county has moved its revenue structure away from property tax and more toward sales tax.
"As a proportion of the overall budget, property tax revenue has gradually diminished, accounting for 13% of general fund revenue in fiscal 2024," she said by email. "Management tools, such as conservative budget assumptions, robust budgetary monitoring and long-term forecasting and planning, are key to the county's success in sustainably navigating budgetary challenges."
Cook County Bureau of Finance spokesperson Edward Nelson said the county recognizes "the challenges related to overlapping taxing bodies," and is "proactively working on building reserves, increasing pension payments, finding structural solutions for structural problems and lowering debt."
This has all been done without raising property taxes since 1996, he said by email.
Fitch Ratings Senior Director Michael Rinaldi said the rating agency is closely watching both commercial and residential property value trends.
Fitch rates Cook County GO and sales tax revenue bonds AA with a positive outlook; it rates Chicago A-minus with a negative outlook.
"Declining assessed valuations can be a credit concern, particularly if other key revenue sources, including sales tax, grow at a slower pace than expected," Rinaldi said by email. "Mitigating policy actions can stem the tide, as can a robust reserve position in Cook County's case, with 2024 fiscal year-end general fund reserves more than 80% of spending."
The city's financial position is a different story given the structural budget gap for 2026, which is estimated to be about 20% of the corporate fund budget, he said. The City Council shot down the mayor's proposed property tax increase in last year's budget proposal; Johnson and alderpeople are now negotiating over several new taxes, including a controversial corporate head tax, to balance the 2026 budget.
S&P assigns Cook County GOs its A-plus rating with a stable outlook, and Moody's Ratings rates the county's GOs Aa3 with a stable outlook.
The county's sales tax bonds are rated triple-A with a stable outlook by KBRA. S&P assigns a AA-minus rating with a stable outlook.
According to the county treasurer's analysis, homeowners around the county were billed for $661.1 million in new taxes, or 6.3% more than they paid for 2023. Commercial, industrial and large multifamily buildings must pay $188.6 million more, a 2.4% increase.
Commercial property taxes dropped by 1.3%, which the treasurer's office said is largely due to commercial assessed values in Chicago's Loop plummeting by 7.2%.
"When the business community loses faith in City Hall's ability to manage its finances, then you've got an 'I'm outta here' problem," Pappas told The Bond Buyer. "The revenue has to come from someplace. And it's falling on residences."
The commercial valuation drop contrasted with much higher assessments on many homes, driving a median 16.7% residential property tax bill increase in the city, a record high.
"Many of Chicago's South and West side communities, where home values have soared in recent years and homeowners are far less likely to appeal their assessed values, will see significant property tax increases," the analysis said.
The treasurer cited the long list of past
Median bills were up more than 30% in many of those areas, the report said.
The office vacancy rate in Chicago's Loop central business district climbed to 28% in 2025. Retail vacancies also increased amid perceptions in some quarters of crime problems, the treasurer's office said.
"The shift onto residential properties occurred after the Cook County Board of Review significantly lowered the estimated values of commercial, industrial and large multifamily properties set by the assessor's office," the analysis said.
The initial valuations of Cook County Assessor Fritz Kaegi gave homeowners 49.2% of the city's total assessed value. But the Board of Review then took off more than 17.5% of the total assessed value of commercial properties in Chicago, 21.9% of industrial properties and 12.9% of large multifamily properties.
After the Board of Review was done, about 3.5% of the overall tax base had shifted away from commercial properties in 2024 versus 2023. The share of the burden borne by residential properties increased to 53.4% before exemptions (after exemptions, homeowners bore 50.9% of the city's total tax bill).
"No, we did not generally agree with the Board of Review's decisions on commercial properties," said Christian Belanger, director of press relations for Kaegi. "We have pointed out in the past that the board disproportionately cuts commercial values."
Belanger pointed to a December 2024
"In particular, the highest value properties tended to be too low," he said.
"The dynamic that we saw this past reassessment cycle is that really big commercial properties downtown, as well as valuable properties elsewhere like data centers, saw really big reductions in their assessed values during the appeals stage," he said.
But "our assessments have to follow the real estate market," he stressed. "And in many parts of Chicago, a lot of historically more affordable neighborhoods on the south and west sides, since the pandemic, home prices have gone up a lot… There's not enough supply of homes in Chicago, there's a homebuilding problem."
Ferguson said it's noteworthy that the sharpest rates of increase hit the less-affluent south and west sides of the city, and "we should expect that we're going to see stark drops in collection rates. That has been signaled by what is going on in the south suburbs... We see poorer suburbs in the south with collection rates as low as in the 30s, when collection rates in the mid-90s are considered the healthy benchmark."
He called it "ironic" that "the failure to scaffold and support business growth in the downtown area" has wound up impacting the city's poorest neighborhoods.
Ferguson also noted that boards of review are designed to reduce taxes, and criticized finger-pointing by officials.
He added, "We have a system that is overly complex and that involves more separately elected component parts than any other in the United States. One would never devise this system today for transparency, reliability and accessibility in terms of understanding of the public for what's going on around property taxes… It almost appears to have been devised to create layers of appeals."
Citing the a recent
Suburban tax increases for 2024 were more even across property types because the suburbs were not reassessed in the 2024 tax year, the treasurer's analysis noted.
"The reassessments of properties in the north and northwest suburbs, and the appeals that ensue, will determine if the shift of tax burden from business to homeowners has run its course," the treasurer's office said.
Chicagoans are midway through a contentious 2026 budget process with a deadline of Dec. 31 to enact the calendar-year-based spending plan. S&P's Nees said the developments outlined in the treasurer's analysis reinforce a trend "that was already evident and probably signals that property tax fatigue will remain a front-burner concern for the foreseeable future," he said.
"For Chicago, the inability to effectively leverage a key revenue source at a time when it already faces an historically large budget deficit contributes meaningfully to the city's credit challenges," Nees said.
