Chicago facing 2024 budget shortfall of $538 million

Chicago faces a $538 million budget shortfall in 2024, with $200 million of it tied to the migrant crisis, influential alderpersons were told Tuesday.

Another $90 million of the budget hole comes from Mayor Brandon Johnson’s decision to get rid of an automatic escalator that would have increased property taxes to match the rate of inflation. Former Mayor Lori Lightfoot championed the property tax escalator. Johnson campaigned on a promise to hold the line on property taxes.

Johnson didn’t take Lightfoot’s word for it when she said she’d left the city in great financial shape, with an $85 million shortfall that was among the lowest in recent Chicago history. And it’s a good thing the new mayor was skeptical of that number, his top aides told members of Johnson’s inner City Council circle who were briefed on the budget forecast.

Full details of the budget project are scheduled to be made public Wednesday.

The projected shortfall also includes $45 million in pension costs Lightfoot intended to off-load to Chicago Public Schools to cover nonteaching employees who draw their retirement checks from the Municipal Employees Pension Fund. Johnson apparently has decided not to shift those costs to CPS.

Also adding to the shortfall is $152 million in federal stimulus funds the former mayor had reserved for “revenue replacement” in 2024.

“We can’t do that. We’ve already made up the revenue” through a recovering Chicago economy, said a City Hall source who was briefed on the revised shortfall and asked to remain anonymous.

Much of the remaining $251 million of the shortfall is tied to newly ratified, five-year contracts that call for 7,000 city tradespeople to continue to receive the prevailing wage paid to their counterparts in private industry.

Budget Director Annette Guzman could not be reached for comment on the shortfall or the tough choices that must be made to eliminate it. At least one of those difficult options would be eliminating thousands of vacant positions, sources said.

As recently as last week, Johnson refused to rule out tax increases or budget cuts to deal with the migrant crisis.

The dramatically higher shortfall was revealed the same day the Council’s Budget Committee slapped another $33 million federal Band-Aid on the migrant crisis — enough to cover only a few months of past and future spending.

That 21-6 vote followed a 90-minute debate that showcased mounting tensions between the immediate need to care for the influx of asylum-seekers coming to Chicago and the demand to reduce the city’s existing homeless population.

Ald. Walter Burnett (27th) called the $33 million grant from the U.S. Department of Homeland Security a “drop in the bucket” for a migrant crisis that will have cost Chicago taxpayers $255.7 million by year’s end and well over $300 million after Johnson forges ahead with his plan to move more than 2,000 asylum-seekers from Chicago police stations and O’Hare and Midway airports into giant tent cities.

Each “winterized base camp” with room for 500 to 1,000 asylum-seekers could add $5 million to migrant costs every month, City Hall sources said.

“We definitely need more money. And for every dollar they don’t give us, it’s more money we have to take out of our other funding in the city,” said Burnett.

Burnett said 40 migrants fly into Chicago every day, “and that’s not even counting” the caravans of buses filled with asylum-seekers.

“We don’t have the money to support all of this,” he said. “So we need as much money as we can get from the federal government,” he added, noting that lots of other people in Chicago also need help. “We have veterans that are homeless. ... We have folks who have been waiting on apartment lists for like, years. And these folks are getting vouchers to get an apartment in six months. And it’s not fair. We’ve got to figure out a way to balance this out.”

A lifelong champion for the homeless who grew up in Cabrini-Green, Burnett said he hopes the challenges posed by the migrant crisis will ultimately leave Chicago better equipped to deal with its own homeless population. In the meantime, it’s a delicate balancing act.

“Every place that we have for a migrant, we should have a little space to get some of these people out of these tents and out from under these viaducts. It’s almost a public safety issue for some folks if you walk up under a viaduct. And if we can help [migrant] people get into a place and spend a lot of money to rehab it, why can’t we do that for other people in our community, too?” he asked.

“Our community don’t have a problem with migrants coming. They have a problem with migrants coming and us not taking care of our homeless people, too.”

In May, a 34-13 Council vote to spend $51 million on the migrant crisis came after a cathartic debate that reduced one member to tears.

There were no tears Tuesday — only frustration about the sketchy information provided to Council members about the $115.2 million spent on the crisis from January through July 23, and the projection from top mayoral aides that it’ll cost Chicago taxpayers $123 million more through year’s end.

Ald. Greg Mitchell (7th) demanded to know why the ordinance authorizing the city to accept the $33 million federal grant states the money is for “noncitizen migrants” while a $3.5 million state grant to support 13 homeless shelters and four service organizations charged with “engagement and outreach” is open to anyone who is unhoused.

“We’re getting questions and getting a lot of pushback from our community. ... We’re getting tents in parks. We’re getting all of this stuff. And nobody in my community is appreciative of any of this,” Mitchell said.

Raymond Barrett, deputy commissioner of finance for the city’s Department of Family and Support Services, said some of the $33 million will reimburse the city for migrant costs already incurred, while some will help tide the city over through year’s end.

That wasn’t good enough to satisfy Mitchell. He demanded line-by-line details of spending dating to August 2022, when busloads of migrants started arriving in Chicago.

“If you’re asking money for a shelter, I want to know all the details,” Mitchell said. “I want to know everything. Is that too much to ask?”

Ald. Andre Vasquez (40th), who chairs the Committee on Immigrant and Refugee Rights, agreed.

“For those of us making the case on the ground,” Vasquez said, “in order for it to be defensible, we need the information.”