Chicago's Rising Taxpayer Burden Amid Financial Crisis
Chicago, Monday, 13 January 2025.
Chicago’s financial state worsens with a $2.6 billion deficit, raising taxpayer burden to $40,600 per resident, necessitating urgent fiscal reforms to prevent further municipal strain.
Deepening Financial Crisis
Truth in Accounting (TIA) has issued a stark warning about Chicago’s deteriorating financial condition, assigning the city an ‘F’ grade as of January 13, 2025 [1]. The city now faces a staggering $40.9 billion in unpaid bills, despite state legislation mandating a balanced budget [1]. This crisis has emerged despite a significant revenue increase of $2.2 billion in 2023, including a 55% surge in property taxes, as expenses continued to outpace income by $580 million [1].
Severe Pension System Shortfalls
The city’s pension systems are severely underfunded, with only 22 cents reserved for every dollar of promised benefits [1]. The situation is particularly dire in specific departments, with the Policemen’s Annuity and Benefit Fund seeing its unfunded liability increase by $1.2 billion, while the Municipal Employees’ Annuity and Benefit Fund’s unfunded liabilities grew by $532 million due to interest rate changes [1]. This systemic underfunding represents a critical threat to the city’s long-term financial stability.
Education System Under Strain
Chicago Public Schools (CPS) is facing its own financial crisis, reporting a negative net position of $18 billion, with expenses exceeding revenues by $367 million in 2023 [1]. The Public School Teachers’ Pension Plan’s underfunding has worsened by $2 billion since 2022, reaching $12.4 billion [1]. Despite these challenges, CPS increased salaries by $250 million (8.2%) in 2023 for cost-of-living adjustments and staff expansion [1].
Transit Authority Leadership Changes Amid Crisis
Adding to the city’s challenges, the Chicago Transit Authority (CTA) is experiencing leadership transitions during this financial turbulence. CTA President Dorval Carter Jr. has announced his retirement, effective January 31, 2025, after a 40-year career in public transportation [4]. This change in leadership comes at a critical time when the transit authority faces potential budget cuts and is exploring measures including possible fare increases to address financial challenges [4].