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Chicago Mayor Brandon Johnson and his administration are presiding over a city in serious financial straits.
Chicago, the nation’s third-largest city, is facing a corporate fund budget gap of more than $1 billion, while its 2025 fiscal year is projected to close with a roughly $150 million deficit with about two-fifths of the budget going toward debt service and pension costs.
Johnson said in April the city was “at a crossroads” and had to “essentially do more with less,” while simultaneously slamming the Trump administration for reportedly threatening federal funding, calling it a “different scenario we weren’t under before.”
Austin Berg, executive director of pro-taxpayer research group Illinois Policy Institute, said markets are looking at the true numbers and are “really concerned” about Chicago.
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“And that’s why you see the spreads on Chicago debt getting wider and wider — the structural issues,” he said.
Berg explained that the situation is akin to someone calling financial advisor Dave Ramsey’s radio show to ask what to do while buried in debt.
“The solution set is always the same: Stop making bad decisions, and you have to put a structure in place to make better decisions,” Berg said.
“So, the bad decisions are things like taking one-time revenues from federal COVID spending and putting it into operations. The bad decisions are borrowing for operations, which this latest bond issue just did. That’s a huge no-no and a red flag for investors.”
Chicago also drew scrutiny over former Mayor Richard M. Daley’s 75-year parking meter lease in 2008, a deal critics say has already allowed the private operator to recoup its investment while leaving the city without that revenue stream for decades.
Berg pointed to a recent analysis he authored accusing Johnson of extending the city’s “pay later” culture, arguing that the mayor’s $830 million 2025 bond deal, which delays principal payments for 20 years, is his version of Richard M. Daley’s parking meter boondoggle.
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He also suggested the city take more seriously a plate of $1 billion in potential efficiencies produced in a taxpayer-funded deep-dive by consulting firm EY, formerly Ernst & Young.
While Chicago spends 40% of its money on debt service, actual services suffer, Berg said, adding is also the only city besides New York that doesn’t require voter approval of new general obligation debt.
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The city lacks a “truly independent” chief financial officer, Berg claimed, saying that the treasurer’s office does not have full auditing authority and that another related agency called COFA is understaffed and lacks resources.
“Voters didn’t decide to have all of that debt. And it’s important for voters to be able to decide because those decisions affect Chicagoans 30 years from now. So, shackling them with these political decisions now is just really unfair,” he said.
Chicago has also come under fire for expenditures on social justice and other efforts while city services continue to lack.
Independent journalist William J. Kelly created a viral moment in January when he questioned Johnson on which type of ICE he should be focused on, immigration officers or snow that inundated the city, as he drove through unplowed streets.
“Let me just commend the efforts of the city employees that made sure that our streets were plowed. … I do not personally plow streets. … No one was stuck,” Johnson replied.
Berg suggested one outlet for Chicago would be to demand the state of Illinois allow municipalities to declare Chapter 9 bankruptcy, which he said is a rare restriction nationally. He noted he did not want to see Chicago declare bankruptcy but that, without that lever, the city has much less leverage when negotiating with public sector unions for the very liabilities it is drowning in.
The City Council successfully killed Johnson’s proposed “head tax,” a per-employee levy on large corporations, which critics said would have driven out or prevented future business and, thereby, sources of revenue in the city.
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The editorial board of the left-leaning Washington Post also slammed Chicago’s straits in a recent op-ed, writing that “it takes a long time to kill a city, and the bigger the city, the longer it takes.”
“Chicago’s ‘public servants’ have done a fine job speeding up the process,” the board wrote, while noting the city had its bond rating downgraded in February by both Kroll and Fitch.
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“The modest tweaks [council] forced [Johnson] to accept in December won’t change the fiscal trajectory,” the paper predicted.
Fox News Digital reached out to Johnson’s office for comment.
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