Chicago and Gary Budgets Put Public Services at Risk

Chicago Mayor Brandon Johnson’s proposed budget would send $286 million to Chicago Public Schools, half the amount the cash-strapped district received last year. That money depends on a $522 million surplus from tax increment financing districts, or TIFs, which also support local construction and public-works projects. The promise is large. The funds aren’t secured.

A budget built on uncertain money

When officials declare a TIF surplus, the funds go proportionally to taxing bodies: about half to CPS and a quarter to the city. CPS and city officials have increasingly relied on TIF money to fill recurring budget gaps, making the surplus decision a high-stakes contest over which public needs get funded.

CPS initially budgeted $200 million from TIFs, then raised its estimate to $285 million after board members and staff unions pushed back. The higher projection aimed to avoid five furlough days. In July, CPS CEO Macquline King called the projection “a conservative estimate.”

The Chicago Teachers Union-aligned school board approved the district’s revised $10.11 billion budget, which counted on $150 million in unconfirmed state funding. The amendment reversed hundreds of layoffs and other department cuts. CPS said it restored about 300 positions, but it remained unclear how long those jobs could last without more money. The union pointed to commitments from state lawmakers; the district warned of serious financial risk.

Illinois law requires CPS to pass its budget by late August, before City Hall finalizes the TIF figure. Three months into the school year, Springfield still hadn’t committed to the $150 million, leaving possible cuts on the table for the spring semester. A larger TIF surplus could have helped offset that risk. A district spokesperson didn’t immediately respond to a request for comment Wednesday.

Aldermen questioned whether the city could produce the surplus Johnson’s plan assumes. After Johnson presented his budget to the City Council on Wednesday, Ald. Anthony Beale said city budget office calculations showed only $225 million available, not $522 million. Aldermen may resist declaring bigger surpluses because the money could otherwise fund TIF projects in their wards. “One of the things that we have to get to the bottom of is which projects are being sacrificed in order to sweep this TIF,” Beale said.

Beale called the plan “nothing but a bailout for CPS.” He said Johnson “strategically bails out CPS because there's no magic money of $150 million coming from Springfield,” adding that the mayor hadn’t mentioned it in his 50-minute speech. Whether the TIF sweep could cancel nearly $300 million in TIF-funded projects may influence aldermen weighing the proposal.

Gary’s delayed votes, and the costs left behind

In Gary, the Common Council postponed votes on the Gary/Chicago International Airport Authority budget, salaries and the general budget after its Tuesday meeting. It approved budgets for the Gary Redevelopment Commission and Gary Public Transportation Corporation. Councilman Kenneth Whisenton, D-at large, moved to schedule a ways and means committee meeting and a special meeting for Nov. 2. Indiana’s Department of Local Government Finance set that date as the deadline for taxing units to adopt 2027 budgets, tax rates and levies.

Council members raised concerns about a deficit of nearly $10 million, while city documents showed revenue had fallen by about $10 million. City Controller Chenika Beck said at a Sept. 29 committee meeting that the city was making cuts to address the shortfall.

Council Vice President Darren Washington, D-at large, pointed to more than $8 million in storm-damage costs the administration was trying to recover from the U.S. Federal Emergency Management Agency. “We were already told by the administration that we have over $8 million in costs (due to storm damage) that we're trying to get back from (the U.S. Federal Emergency Management Agency) that might not come back in the next couple of years,” Washington said. He also raised concerns about the effect of 2025's Senate Enrolled Act 1 on Gary's budget.

A separate state comptroller mistake tied to the move of the Majestic Star casinos requires Gary to pay more than $12 million to East Chicago and Michigan City. The state comptroller will withhold money from the city’s funds for 10 years.

The council unanimously approved the Gary Public Transportation Corporation budget of about $18.3 million, mostly from federal grants. The department plans facility and vehicle upgrades next year. The redevelopment department budget passed 6-1; Washington voted against it, saying he couldn’t justify Executive Director Christopher Harris’s proposed salary of just under $92,370.

The council also approved a $750,000 grant for Edgewater Health and Community HealthNet after both organizations sought emergency funds following the Aug. 11 derecho. Edgewater received $250,000 and Community HealthNet $500,000. Dr. Danita Johnson Woods, president and CEO of Edgewater Health, said the organization closed for about two weeks after the derecho and power outages, kept paying employees, and now had a “serious cash flow problem.” Dr. Janet Seabrook, CEO of Community HealthNet, said her organization faced a similar situation. The grant passed 6-1 after the council suspended its rules to vote that week. Washington objected that the request came at the last minute and should have gone through committee. No grassroots response appears in these budget proceedings; the documented remedies run through city allocations, state commitments and institutional grants.

Chicago must approve a final budget by the new year with a simple majority, or 26 of 50 aldermen. Last year’s dispute stretched into December, when a bloc of insurgent aldermen rejected Johnson’s budget and passed an alternative. The previous year’s record $1 billion surplus gave CPS a $576 million cash infusion, of which $175 million went back to the city for a pension payment. District officials said they had no indication a surplus that size would recur. Chicago Teachers Union President Stacy Davis Gates praised Johnson’s proposal and urged state lawmakers to provide CPS funding before the fall veto session ended: “This is what it looks like when Chicago elects a mayor who believes in public education. Now the governor and General Assembly have to follow suit.”