Budget season is upon us! On October 30th, Mayor Johnson will announce his proposal for the City of Chicago’s 2025 budget. Today, we’re breaking down how the City of Chicago’s budget process works!
What is included in the budget process?
The City of Chicago fiscal year (FY) begins each year on January 1st, and ends on December 31st. In the fall, the budget for the following fiscal year is proposed by the Mayor’s Office of Budget Management (OBM) for City Council approval.
Preparing the Budget
The City’s budget includes the individual budgets of over 30 City departments and offices like the Chicago Police Department (CPD), the Department of Transportation (CDOT), the Chicago Fire Department (CFD), the Chicago Public Library, and the Mayor’s Office. The City of Chicago budget does not include the budgets of the Chicago Public Schools, the Chicago Park District, or the Chicago Transit Authority (CTA). These are separate governmental entities known as “sister agencies,” and they have separate budget processes.
Departments that do fall under the City of Chicago’s budget submit their individual budgets to the OBM each summer. The OBM then prepares a Budget Forecast based on those proposals and their projections for estimated revenues.
Presenting the Budget
Once the budget is prepared by the OBM, they present their forecast and recommendations to the City Council for approval. Here’s what that timeline typically looks like:
- Budget Forecast: In mid-to-late summer, the OBM releases a budget forecast, which includes financial projections for the following fiscal year.
- Budget Recommendations: typically in late September, the OBM releases its official budget recommendations for City Council approval. They also release the Budget Overview, which contains a broad overview of the proposed budgets for the Mayor’s Office and individual departments, along with financial summaries for each fund, explanations of funding sources, and the Mayor’s strategic priorities and goals for the upcoming fiscal year.
- Annual Budget Address: the Mayor presents the budget to the public and City Council, including the proposed funding allocations and addresses any forecasted gaps. This typically happens in mid-October.
- Public Budget Data: Around the same time as the public address, the OBM will also release infographics, overlaying reports on grants, equity analyses, and data on appropriations, positions and salaries, and revenue (check out the FY24 documents to see what you can expect!)
Public Hearings
Once the proposed budget has been presented, the Committee on Budget and Government Operations (COBG) holds public informational hearings with leadership from some of the major departments and offices listed in the budget recommendations. These hearings typically begin in mid-October and last for 2-3 weeks.
City council members use these hearings to ask questions about appropriations and management issues that they believe need to be addressed before they will vote on the proposed budget. During the hearings, City Council members also engage in negotiations with the Mayor’s Office, as the Mayor seeks to secure a majority vote (25+1).
During these hearings, members of the public can also give public comment, which we encourage you to do! It’s a great opportunity for the public to give feedback on how their funds are spent. You can also watch the public hearings through the City Clerk’s website.
Voting on the Budget
Once hearings and negotiations have concluded, the OBM will submit its revised and amended budget recommendations and introduce the final budget— or, as it is known by its official legislative title, the Annual Appropriations Ordinance!
The legislation voted on by City Council includes several different ordinances, including:
- Annual Revenue Ordinance, which may amend sections of the Municipal Code to raise or cut revenue;
- Annual Appropriations Ordinance, which includes the budget expenses for the following year;
- A Municipal Code Management ordinance, which amends any relevant sections of the municipal code that are needed to align with the appropriations ordinance.
- A property tax levy, which sets the revenue that will be collected by the City through Cook County property taxes.
Once those ordinances have been revised and submitted, the Committee on Budget and Government Operations will host an official committee meeting, where members vote to pass the ordinances out of committee. The ordinances then move to the full City Council for a final vote and adoption!
To learn more about the budget process, check out some of the resources below:
- For a more comprehensive review of the budget process, check out this explainer from the Office of the Inspector General
- To see what last year’s budget included, review the FY24 Budget Recommendations and Annual Appropriations Ordinance and the FY24 Municipal Code Management Ordinance
- To see the budget vote in action, watch the final FY24 COBG meeting and/or the final FY24 City Council meeting
How is the budget funded?
Funds for the City’s budget comes from a combination of taxes, fees, fines, and grants. That revenue is directed to either local funds or grant funds, depending on their source. Local funds include any money generated by activities that fall under City Control, while grant funds are provided by a separate entity (e.g. the federal government).
Here’s a breakdown of the funds that the City of Chicago’s budget draws from:
- Corporate Fund: This is the City’s largest local fund and is spent on general operations. The Corporate Fund draws from local tax revenue, fees and fines imposed by the City, and intergovernmental revenue (e.g. the City’s portion of the State income tax).
- Enterprise Funds: these funds are drawn only from charges and fees imposed by the City for the use of water system, sewer system, and airports, and they are spent to support the same services.
- Special Revenue Funds: These funds are used to allocate revenue from specific taxes and other sources that were designed by law to finance a specific function or program, e.g. the Controlled Substances Fund, which is funded by fines collected from the city and is allocated to enforcing laws regulating controlled substances.
- Grant Funds: these funds are provided by federal agencies, state agencies, local agencies, and private organizations.
What do projections for this year’s budget look like?
The 2025 Budget Forecast projects a gap of $982.4 Million for FY25. This is a major gap, and one that will be challenging to solve. To give themselves more time to address these gaps, the Mayor’s Office pushed back budget season from October to November. Once the official budget is released next Wednesday, we will review it in light of our budget priorities as the City Council prepares to enter hearings and negotiations.
Going into this budget season, some of the priorities we’ll be keeping at the front of mind are:
- addressing the rising homelessness in Chicago;
- funding violence prevention initiatives;
- and, as always, improving government services for all Chicagoans.
When we’re looking at a gap as large as this one is, we also want to look at where efficiencies might be found––while also ensuring that vital needs and services are protected. Make no mistake: this budget will be a challenging one to solve. We’re looking forward to sharing all of the news and information with you along the way.
Follow along with this year’s budget!
The City of Chicago budget impacts all Chicagoans, so we invite you to follow along as we navigate this year’s budget process! We’ll host a weekly budget update to keep you informed on the proposed budget, what we learn from the hearings, and how Ald. Vasquez will ultimately vote. You can also keep tabs on our Instagram page for daily downloads of the hearings from Ald. Vasquez.
Our goal is always to provide transparency and accountability to our neighbors about the City budget. Simply put: it’s your money, so you should know how it’s being spent!