November 03, 2023
Civic Federation Acting President Sarah Wetmore testifies to City Council during a budget hearing on Wednesday, Nov. 1.
The Civic Federation on Wednesday released its latest report, City of Chicago FY2024 Proposed Budget: Analysis and Recommendations. The report was prepared for consideration by Mayor Johnson and his administration as well as the City Council in advance of the Council’s upcoming vote on the proposed FY2024 budget in mid-November. The report is also intended to be a resource for the public. Following the report’s release, Civic Federation Acting President Sarah Wetmore testified at the Chicago City Council’s budget hearing, sharing the Federation’s key concerns and recommendations regarding the proposal for the 2024 fiscal year beginning on January 1.
The Civic Federation supports Chicago Mayor Brandon Johnson’s proposed FY2024 budget, which maintains the City’s commitment to making supplemental pension contributions, avoids general tax hikes and increases the number of civilian positions within the Chicago Police Department. However, the Federation is concerned about an ongoing structural imbalance within the City’s budget and several sources of future financial stress for which the City must find solutions, such as proposed pension benefit enhancements and the cost of the migrant crisis.
The full report is available at civicfed.org/ChicagoFY2024.
REPORT EXCERPT:
The Civic Federation supports Mayor Johnson’s proposed FY2024 budget of $16.6 billion. The City of Chicago budget continues to benefit from the region’s strong economic recovery from the pandemic and recently improved revenue performance in areas that had thus far been slower to recover, such as tourism and large events. Further, it reflects several policies that the Civic Federation supports, including $306.6 million in supplemental payments to the City’s four pension funds and a move to increase the number of civilian positions within the Police Department. Overall, the proposed budget will get the City through the next year while maintaining the status quo, but it is crucial that the administration develop a long-term plan to address issues that will continue to put a strain on the City’s finances in upcoming years.
The Federation has ongoing concerns about the City budget’s persistent structural imbalance and the use of one-time revenue sources to close the budget gap. In addition, emerging issues like the migrant crisis and some State legislative proposals to enhance pension benefits could add to already rising costs. It will be incumbent upon the administration and City Council to identify additional cuts, savings and sources of revenue to achieve future budget sustainability. Recognizing the pressing issue of caring for the influx of migrants in Chicago, the Federation calls for the development of a contingency plan in the event the State and federal government do not provide additional funding in the coming year.
Despite a large deficit projected for FY2024 and several looming budgetary concerns, the City’s financial position continues to show signs of improvement, as recognized by various credit rating upgrades between 2022 and 2023. The most recent upgrade from Fitch Ratings on October 19, 2023, following the release of the budget, cited long-term liability reductions deriving from improved debt management practices and sustained economic growth. However, the Civic Federation agrees with the rating agency’s concerns regarding the reliance on economically sensitive revenue sources, high pension and debt burdens and the use of onetime revenues to close budget gaps as potential threats to future economic vitality.1
Consistent with previous years, the Civic Federation urges the Mayor and City Council to develop a long-term plan for sustaining increasing spending levels, and particularly finding additional stable revenue sources to fund pension costs. The Federation continues to offer several recommendations to improve budgetary transparency across City departments, as well as enhanced transparency in the Chicago Police Department’s implementation of the federal consent decree and the department’s staffing allocations. The Federation also offers recommendations to improve transparency in the City Council’s meeting agenda process.
RELATED MEDIA COVERAGE:
Chicago Sun-Times: “Civic Federation urges City Council to devise contingency plan for migrant funding”
Crain’s Chicago Business: “Civic Federation gives thumbs-up to Johnson's first budget, with two warnings”
References
1. Fitch Ratings, “Fitch Upgrades Chicago, IL’s IDR and GO’s to ‘BBB+’; Outlook Stable,” October 19, 2023.