The $16.6 billion 2026 budget approved by a City Council majority that rejected Mayor Brandon Johnson’s corporate head tax is a “slight improvement,” but puts the burden on taxpayers, gives labor a pass and falls short on cost-cutting, a new report warned Monday.
The Civic Federation was part of the financial brain trust guiding the renegade group of conservative and moderate alderpersons that seized control over a budget process long dictated by Chicago mayors. But that didn’t stop Chicago’s oldest and most respected taxpayer watchdog group from poking holes in the final product.
Monday’s report concludes there is precious little to show for what it called the “valiant effort to flex muscles the Council has always theoretically had, but never used.”
The final budget includes “only a handful of efficiencies and cost savings” and places the burden “entirely on taxpayers, leaving labor completely off the hook for sharing the burden,” the report states.
It also includes a “shocking amount of new borrowing for operating costs” and a record, $1 billion tax increment financing surplus that could “impair economic development capacities and will not be sustainable in the future.”
“The most disappointing thing… is that it leaves the city in much the same place as where it started and threatens to undo progress made in recent years on the city’s credit rating and pension funding,” the report states.
“The final budget represents a slight improvement, but does not address rating agencies’ concerns about structural issues… While city finances have not yet reached the point of full financial crisis, the budget continues the downward path with no clear plan to reverse course.”
Far Northwest Side Ald. Samantha Nugent (39th) said the rebel group she helped lead “worked tirelessly” to craft a budget that “prioritized the advanced pension payment, no head tax and, if we could find the funds, cover for the firefighter back pay,” all stated priorities for the Civic Federation.
But after eliminating the head tax, fully restoring the $260 million advance pension payment and abandoning plans to raise garbage collection fees, the opposition group ran out of money to scrap the mayor’s plan for a five-year, $166 million loan to cover four years’ worth of retroactive pay raises for firefighters and paramedics.
“I question reports that Monday-morning quarterback decisions we made with a lot of moving pieces and a lot of moving parts, that ultimately had the consensus of 30 members of Council,” Nugent said. “We worked very hard to find efficiencies from within before we looked to the taxpayer. We relied heavily on the [Ernst Young] report and we pushed back on the administration to find even more efficiencies than what they put forth in the budget. We were looking to pass a budget by addition — not subtraction — and working with colleagues. And that’s what we ultimately did.”
Civic Federation President Joe Ferguson could not be reached for comment on the latest in a series of reports on the city’s 2026 budget
Nugent noted that breakaway alderpersons were “up against a clock” and were operating at a distinct disadvantage.
“This was aldermen-led and driven, who don’t have the staff or the policy expertise of the Civic Federation, nor the entire fourth and fifth and sixth floor of City Hall,” she said. “I can only speak to the work that I did and my colleagues did. I’m proud of it. It is a balanced budget that was thoughtful and collaborative. And now, our job is to effectuate it.”
The implementation phase is proving be an ongoing struggle.
Already, Johnson has cut the advance pension payment into two installments, citing cash flow concerns, dragged his feet on legalizing video gambling terminals and warned that he is bracing City Hall for a potentially painful round of midyear layoffs amid fears that the newly revised revenue plan included shaky and unrealistic estimates that would set up Chicago for a midyear budget shortfall.
During a 12-year run as Chicago’s inspector general, Ferguson pressured three Chicago mayors to challenge organized labor to share the budget-cutting pain required to solve the city’s structural deficit.
This time around, that “could have come in the form of furlough days — an immediate, but not long-term solution — or beginning the hard work of conducting a full analysis of personnel to determine which positions [filled or unfilled] across each department are needed,” the new report states.
The failure to “address the misalignment between current personnel and vacancies” is at least part of the reason why the final budget product comes as such a disappointment to the Civic Federation even though it includes “an additional $46.6 million in efficiencies.”
The final spending plan will “allow the city to eke out another year, but ultimately leaves the city in the same place” next year, the report states.