Chicago Mayor Brandon Johnson faces $882M budget gap heading into 2027

CHICAGO - Chicago is facing a projected $882 million budget gap in 2027, according to the city’s newly released financial forecast.

Mayor Brandon Johnson says the gap is significantly smaller than what the city projected one year ago, crediting several revenue measures that have outperformed expectations.

But with the city preparing its full 2027 budget proposal, major questions remain about potential tax increases, spending cuts and whether city jobs could be on the chopping block.

$882 million budget gap in 2027

What we know:

The city's financial team says the projected FY2027 gap is $882 million — down from the roughly $1.2 billion gap projected for the same fiscal year last year.

Johnson pointed to the city's so-called progressive revenue measures as a major reason for the improvement.

He said the projected gap is nearly $284 million lower than last year's forecast.

"The projected 2027 budget gap is nearly $284 million lower than what we anticipated in last year's forecast," Johnson said.

City officials say one of the biggest contributors is the Personal Property Lease Transaction Tax, or PPLT, which is projected to bring in about $41 million more than expected.

But the city is also facing a number of significant expenses.

The forecast includes a $266 million increase in settlements and judgments compared with FY2026, with the city budgeting about $401 million for settlements and judgments next year.

City officials say those costs include expected payouts from cases dating back decades.

Debt service is also expected to increase by about $70 million, while the city anticipates higher costs for fuel and energy, employee benefits and pension obligations.

The forecast assumes the city will make its full supplemental pension payment in FY2027.

Officials also say the city plans to make the second half of its supplemental pension payment this month, bringing total supplemental payments to the city's four pension funds to about $1 billion since 2023.

What we don't know:

The biggest unanswered question is how Chicago will close the $882 million gap.

Johnson was asked directly whether he would propose a property tax increase.

He did not rule one out.

Instead, the mayor said he wants people and corporations with greater means to contribute more.

"Those who have the ability to contribute more to do more," Johnson said. 

Johnson was also asked whether closing the gap could mean city layoffs or job cuts.

He again did not provide a specific plan, but said protecting city workers and critical services remains his priority.

"The idea of having to cut first responders is not something that I or nor the people of Chicago want to see take place," Johnson said. 

The mayor said he wants to protect city jobs and services while pursuing what he calls progressive revenue.

Johnson was also pressed on whether he would bring back a proposed head tax after facing opposition from members of the City Council last year.

He did not commit to a specific proposal.

Instead, he repeatedly said the city is focused on the forecast now and that his full budget proposal will come in the coming weeks.

Another unresolved issue is the amount of money Chicago could receive from a TIF surplus.

City officials currently estimate the surplus in the range of $330 million to $340 million, but say that number could change before the final budget is presented.

That's particularly important for Chicago Public Schools, which is relying on hundreds of millions of dollars from a TIF surplus in its own budget.

What they're saying:

"He is really dropped the ball, you know, his administration told us when we passed the budget that they didn't intend to follow up with some of these requirements that we imposed by passing it with a city council majority," said Ald. Brian Hopkins, 2nd Ward. "I'll take the mayor at his word that we're seeing revenue shortfalls in some of these areas simply because they didn't make any sincere attempts to collect the revenues in the first place."

Members of the Chicago City Council, in the Budget Accountability Coalition, issued this statement Thursday: 

"While the Johnson administration works overtime to deflect from failures of its own making, the reality is straightforward - this administration abandoned Chicagoans on the most basic responsibility of governing: executing the budget. They slow-walked multiple FY26 revenue measures that could’ve generated hundreds of millions towards reducing our structural deficit, then pointed fingers at everyone else for not getting the job done.

"Now they’re taking credit for outcomes they had nothing to do with: a PPLT revenue stream they didn’t execute, a budget the Mayor refused to sign, and a pension payment City Council forced them to make. Meanwhile, debt owed to the City has grown nearly $2 billion on Johnson’s watch - money Chicagoans are counting on to help close this very deficit. They make claims of monetizing assets that don’t exist, and tout "expenditure reductions," which means hiring fewer police officers to serve communities living with violence every day.

"We understand an election is around the corner, and silly season is here. But Chicagoans know spin when they see it and we will continue to work to do what’s in the best interest of our residents, families and businesses and focus on putting Chicago on its best financial footing possible."

What's next:

Johnson says he plans to work with city departments, aldermen, city workers and the business community as his administration develops the 2027 budget.

He says the goal is to make structural changes rather than relying on one-time fixes.

The mayor is also promising a more collaborative budget process after criticism from some aldermen over last year's negotiations.

But the numbers show Chicago still faces a major structural budget challenge.

The administration will have to determine how much can be raised through new or existing revenue sources — and how much may have to come from spending reductions.

The city's forecast is not the final 2027 budget.

Johnson says that proposal is expected in the coming weeks, setting up what could be another contentious budget fight at City Hall this fall.