August 08, 2025
Published originally in Chicago Tribune on Friday, August 8, 2025.
Chicago is staring down a $1.1 billion budget deficit next year, and to effectively address it, we will have use a variety of tools to position the city for both the short and long term. Beyond the deep structural issues of a transit system grappling with potentially devastating service cuts and grossly underfunded Chicago police and fire pension funds, the city is heading into this fall’s budget season contending with pandemic relief funds drying up at the same time the federal government continues to slash funding, among other challenges.
It is critical for the city and all of us who have a stake in the short- and long-term viability of Chicago to take a hard look at where we stand and stabilize revenues and expenses for the future. Chicago has a long history of looking to year-to-year “solutions” to solve for its budgetary woes when what we really need is a long-term, fiscally responsible approach.
In recent weeks, we have heard various proposals that could have a significant negative impact on the economic prosperity of the city and its ability to provide jobs. These proposals — the potential reinstitution of a per-employee head tax, for instance, or an “excise tax” on payrolls for those making more than $200,000 a year — could harm our ability to keep and recruit employers at a time when we need economic growth to help dig ourselves out of this trench.
Budgeting is hard. It requires tough choices and trade-offs and thoughtful debate across a spectrum of perspectives. Circumstances like these make it even harder. But instead of fighting over a shrinking resource pie, the city must grow that pie by promoting more business and population growth as well as improve the economic mobility of all Chicagoans.
With such high stakes and so many factors to navigate, our organizations — the Civic Committee of the Commercial Club of Chicago, the Civic Federation and the Better Government Association — have developed a set of guiding principles to help policymakers cut through the complexity and make the best fiscal choices for Chicago and Chicagoans.
An effective, responsible budget proposal should:
- Do no harm: Do not implement budget “solutions” that will provide short-term budget relief at the expense of the city’s long-term financial stability. Do not pursue policies that would negatively impact the city’s credit rating.
- No revenue increases without expense reduction: Couple consideration of any revenue increases with meaningful cost reductions to demonstrate fiscal discipline.
- Support economic growth and job creation for all Chicagoans: Align fiscal policies with strategies that enhance Chicago’s economic competitiveness, support job creation and expand the tax base through strategies that benefit downtown and all neighborhoods. Make smart evidence-based investments that create more economic mobility for low-income Chicagoans. Avoid any policies that would negatively impact economic growth and investment in the city.
- Maximize operational efficiency: Implement systematic cost-saving measures through service delivery improvements, technology adoption and process optimization while maintaining service quality. Ensure taxpayers receive maximum value from every dollar spent.
- Strengthen the city’s credit rating: Take actions that lead to credit rating improvements, which will reduce borrowing costs and signal to residents and investors that Chicago has its fiscal house in order. Publicly identify a goal credit rating and a time frame for reaching that goal.
- Pay down Chicago’s $35 billion-plus unfunded pension liability: Address the city’s largest financial obligation by ensuring the city makes required pension contributions and continues making additional payments to the pension systems to ensure “tread water” funding at a minimum. Avoid pension sweeteners or other actions that would increase pension debt.
- Use one-time resources strategically: If any one-time revenues are raised, ensure that they are directed at one-time expenses, not recurring costs.
- Focus on structural solutions: The budget should align the cost of operations with projected revenues. Prioritize structural solutions that will reduce reliance on nonrecurring revenues or one-time expense reductions. Review the budget baseline against pre-pandemic spending and service benchmarks, avoiding comparisons with temporary increases funded largely by federal outlays.
- Promote transparency in budgeting: Make full, public disclosure of the cost of policy proposals. Establish clear metrics to measure the effectiveness of programs, and budget realistically for anticipated costs (e.g., legal settlements). Establish clear metrics and timelines for deficit reduction and commit to regular public reporting on progress toward targets.
- Budget in the context of other demands on taxpayer resources: Recognize that the city is one of several interconnected public entities facing financial challenges. Budgetary solutions should consider the potential effect on sister agencies (e.g., CTA and Chicago Public Schools) that share a common tax base and population.
By considering the budget options on the table through these lenses, we believe our city can steer away from its stubborn short-term thinking and dysfunctional remedies and move toward fiscal stability.
Our organizations seek a thriving city that works for everyone, and we can best get there if our policies are anchored by intentional, disciplined choices that position us for success and stability now and for years to come. Implementing these principles won’t clear the path forward of every bump, but hopefully it can help lead us in the right direction together.
Derek Douglas is president of the Civic Committee of the Commercial Club of Chicago. Joe Ferguson is president of the Civic Federation. David Greising is president of the Better Government Association.
Published originally in Chicago Tribune on Friday, August 8, 2025.