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Greetings!
This was the last week of budget hearings but after several new concerns were pointed out by many aldermen in the $16.7 billion 2026 budget, it looks like the revenue portion of the budget vote on Monday might be delayed. On Thursday morning, the Mayor also threw a new layer into his budget by submitting ordinances for two new bond deals totalling over $18 billion.
As you may know, the City spent $3.2 million for Ernst and Young (EY) to identify savings, efficiencies, cuts and other options for the City to undertake in this budget and future years. Despite repeated requests and the city’s own EY report identifying $1.4B in possible efficiencies, only a small amount of structural savings are included in this budget. Many of us pointed out problems with different aspects of the budget, based on the EY report and findings in the public hearings. We also provided dozens of opportunities for fixing department budgets while providing more efficient service. The budget is already unbalanced with the need to subtract another $10 million from the budget projections due to the hemp law changes coming at the federal level and with last minute changes by the mayor is now further out of whack.
We also don’t know what alternative options that were considered but rejected after asking late last night during hearings. These are basic questions that must be answered before a vote that still pushes an anti-business head tax and in a new addition late this week, dramatically increases the PPLT or personal property lease tax (mostly a cloud and computer tax) to 15%. The tax also includes any leased equipment, vehicles and more. The council still has insufficient data or details from the budget office on the Head Tax or PPLT among many of the other new taxes proposed by Mayor Johnson and council allies.
Today, I sent a follow up letter to questions asking in hearings to the budget chair, asking him to continue to work with those of us who have serious concerns about the budget, and look for efficiencies that have not yet been considered. After reviewing the EY report and related fiscal analyses, we have identified another set of potential efficiencies totaling approximately $30–$60 million that may be viable for implementation in FY26. These include:
-Conducting a comprehensive claims and fee-integrity study
-Eliminating HMO stop-loss coverage
-Closing budgeted vacant positions in targeted roles; diverting appropriate 911 calls to hospital-based telehealth programs
-Reducing 311 call center hours from 24/7 to more limited hours
-Replacing CPD overtime for traffic management with traffic aides, and
-Consolidating City office space while pursuing land sales or adaptive reuse of City-owned property.
The City Council needs to know the feasibility of pursuing these efficiencies and many more throughout all departments. I believe all departments should have efficiencies presented but many did not, and only a portion of the city departments fell under the EY review. The proposals above are drawn directly from the EY report and supportive fiscal materials, and many of my colleagues and I believe they should be fully evaluated before the Council is asked to consider additional revenue measures.
Furthermore, many answers to questions posed by council members over the past three weeks regarding departmental budgets were only released late last night via the city budget website. Legal policy positions we demanded to see on items like the hemp tax, social media tax and more that will make up the mayors budget have been completely blocked by the mayor.
We need more time for updated analyses reflecting the amended revenue package. We need answers to the many outstanding questions we’ve submitted. We need to see a meaningful efficiencies plan, as well as a full review of the proposed borrowing and its long-term implications.
Chicagoans deserve a budget that strengthens, not jeopardizes, the city’s financial future. The council should certainly not rush into voting on a multi-billion-dollar package without the information required to responsibly govern.
Since the mayors budget is reliant on also passing the $18.1 billion bond deal, having only 4 days to review the bond deal is like Mayor Johnson passing meter deal 2.0. When Mayor Johnson says we had months to review the budget and the new bond deal that we found out props up this budget , he is wrong.
The budget and bond deal need to be delayed with the opportunity for complete review and amendments that would prevent a fiscal train wreck. The bond deals (two ordinances) remove oversight by the council with no need for a council vote on bond items, has a 40 year repayment plan on assets which is normal, but also a 40 year repayment plan on operating expenditures which is inappropriate and kicks the can down the road for our children to pick up the bills. Outside experts that reviewed the bond deals overnight indicate they would not move forward with such bond deals similar to the $830 million bond deal Mayor Johnson pushed through that will cost taxpayers over $2 billion when done due to the lack of transparency and delayed interest and principal payments.
If the mayor insists on passing his budget early next week, it would be another serious fiscal failure and could lead to taxpayers paying more because of this rush to pass. While the 5th floor may not care about ratings, the S&P rating agency explicitly warned the City to pursue structural changes and efficiencies. Passing a rushed budget without demonstrating those changes will force another downgrade and cost taxpayers tens of millions of dollars more on this budget alone. The Mayor owes it to working families to incorporate that warning from S&P, to be transparent, to listen to those who want to avoid a fiscal debacle and put the City on the correct path especially as our property taxes rise even further.
The mayor's plan is to move forward on Monday and Tuesday with council votes. You can watch on the City Clerk's website to see how it goes. This would be the shortest timeframe to a budget vote if he decides to move forward.
On a final fiscal note, many of us were stunned by a political pronouncement from the City Treasurer this week as she testified at the budget saying she was unilaterally divesting all city funds in the U.S. Treasury. I thought this was an irresponsible statement by the chief financial officer of the City of Chicago who has a fiduciary duty to the city and taxpayers that this action could harm. Investing our funds in the US Treasury has brought us low risk, solid returns for decades. While we have divested from fossil fuels, it was done in a prudent manner that considered all aspects of divestment, and was done in collaboration with several entities and via an open council vote. No action should be taken to unilaterally pull our City funds from the U.S. Treasury.
There is a great opportunity to help out those in need this Thanksgiving season, starting Sunday at one of many locations for the Lincoln Avenue Food Drive- see below for details. We also recommend donating to one of our local pantries or via the Greater Chicago Food Depository. Please read below for many more events and infrastructure updates in the 32nd Ward and City.
Have a good weekend,
Alderman Scott Waguespack
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