Chicago expects narrower deficits over the next couple of years thanks largely to a rapid economic recovery, outgoing Mayor Lori Lightfoot said in a mid-year budget forecast.
(Bloomberg) — Chicago expects narrower deficits over the next couple of years thanks largely to a rapid economic recovery, outgoing Mayor Lori Lightfoot said in a mid-year budget forecast.
The city’s deficit in 2024 will top out at $85 million, down from a previous projection of more than $473 million, according to the forecast released Tuesday, just about a month before Mayor-Elect Brandon Johnson takes office.
The city’s budget forecasts for future years do not include federal stimulus dollars but do incorporate revenue from the automatic annual property tax increases tied to inflation. Johnson has said he opposes property tax increases, but during his campaign he proposed $800 million in new taxes to deal with the deficit and invest in residents and neighborhoods across the city, not just downtown.
“This updated Mid-Year Budget Forecast is proof of the work my administration has done to bring about the City’s financial turnaround,” Lightfoot, who lost her bid for a second term in February, said in a statement. “As a result, we can now project the lowest sustained budget gaps in decades.”
Higher contributions to underfunded pensions helped the city shed its one junk rating in November from Moody’s Investors Service.
The city now estimates it ended 2022 with a surplus of $554 million, which has been used to set up a so-called pension advance fund through 2026 to contribute above the statutory requirement. Decades of chronic underfunding led the city’s unfunded pension liability to reach almost $34 billion. The low level of funding for pensions has been an ongoing weight on the city’s finances and credit ratings.
Additionally, Chicago will see a $142 million surplus this year, a swing from the previous projection of about a $127 million deficit, according to the release.
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