Our team has been hard at work analyzing the 2026 City of Chicago Budget proposal, as well as meeting with independent budget watchdog organizations to get their feedback! Here’s what we’ve learned so far:
New or Notable Revenues
The budget proposal includes many proposed new revenues, including:
- SMART tax: The current budget proposal establishes a Social Media Amusement & Responsibility Tax (SMART). This tax would extend the City’s amusement tax to large tech companies, such as Meta, that profit from data mining from its users. SMART would charge large tech companies companies 50¢ per every active user over 100,000. It is estimated to generate an additional $31M a year in revenue, which OBM projects will begin to be collected in January, but other groups warn that lawsuits may hit immediately if such a measure is passed. This removes the guarantee that this revenue will be collected until court case shakes out.
- Community Safety Fund: The current budget proposal establishes a new Community Safety Fund, modeled after the former “Head Tax” dissolved under Mayor Emmanuel, which would apply to businesses with 100+ employees who perform 50% or more of their work within the City of Chicago. These employers will be required to pay a $21/employee surcharge each month, which is projected to generate $100M in its first year. Governor Pritzker has since come out against the tax, so If City Council does not have the votes to implement it, this will be a hole that then new revenue needs to cover proposed revenue.
- Hemp Tax: Ald. Vasquez introduced a hemp taxing framework during last year’s budget cycle that would remove the onus on city government to regulate safety for all hemp products, knowing that the department that would do so (DPH) has been slashed by the federal government and didn’t have the requisite amount of Corporate Fund investment to create a robust regulatory and enforcement framework to begin with. While we are pleased to see the Mayor’s Office move on Ald. Vasquez’ proposal, there are several details of its implementation that remain unclear, and that we need to get clarity on.
Notable Investments
CPD continues to be the best-funded city department, at 21% of all appropriations and 32% of all local fund appropriations, and 39% of all budgeted positions. Given that CPD exceeds its budget every year through hidden costs like misconduct settlements that we have to borrow money to pay for via bonding, this is an area that needs much more transparency, which we will be pushing for as part of the budget process.
Chicago taxpayers have spent at least $231.2 million in 2025 to resolve CPD misconduct lawsuits — including wrongful convictions and improper pursuits — outspending the budgeted amount by nearly $150 million. According to WTTW’s analysis, cases that involved an officer with repeat misconduct claims account for nearly 60% of the amount the City has paid to resolve police misconduct cases between 2019 and 2024.
This September, Alder Vasquez introduced a resolution (R2025-0019957) calling for a Hearing on Police Misconduct Settlements, so that we can analyze the trends in misconduct and remedies to prevent further misconduct. We will continue working toward greater transparency and accountability as part of this year’s budget process.
Here are some other notable investments:
- The Department of Environment (DOE) is increasing in total funding and positions, we hope because compliance is moving from the Department of Public Health (CDPH) to the DOE. There have been issues in CDPH doing environmental compliance and advocates have been asking for this shift since we were able to reconstruct DOE in the 2024 budget.
- The Department of Water Management, Department of Aviation the other biggest proposed departmental budget increases, likely for lead service line projects and airport expansion work––this is an area we are working to get transparency around!
- The Department of Finance (DOF) has added revenue-generating positions in parking enforcement. We have been advocating that the city move parking enforcement to the DOF as opposed to the Chicago Police Department (CPD), so we will be following up to see whether these funds will go toward that end to fund the PART program, which Ald. Vasquez co-sponsored .
Notable Cuts
Total appropriations have declined from last year, so we are looking to get a better understanding of which departments that provide constituent services to 40th Ward neighbors will be affected. The Chicago Department of Public Health, Chicago Public Library, and Department of Streets and Sanitation were among the departments with the largest reductions in force.
Payment of bonds and capital construction is also down, begging the question of what this may do to ratings and borrowing costs down the line, and why we are not budgeting for construction. Pension payments that the City has been actuarially calculating in recent years due to council urging are reduced this year. While the Chief Financial Officer and the Office of Budget Management (OBM) claim that these payments are sufficient and won’t trigger unforeseen consequences, given the recent history of credit rating downgrades since the passage of the FY25 budget, this deserves much closer scrutiny.
Here are some other notable cuts in spending:
- This budget proposal includes the largest TIF surplus that has been proposed to date ($1 billion), all while the city council reckons with eliminating TIFs entirely, which would mean that some ward-level projects that don’t already have approval will be put on (perhaps indefinite) hold. The Chairs of the 3 most powerful committees (Rules, Budget and Finance) have come out against this, so this full amount may or may not be included in the final budget. However, a majority of city council (including Ald. Vasquez) has been in support of TIF surplusing going to CPS budget holes caused by federal government cuts and lack of adequate state funding.
- The Legal Protection Fund has been slashed from $3M to $1.5M in an environment where Mayor Johnson has said he wants to Protect Chicago from Trump’s unconstitutional detentions of Chicagoans. The halving of this line item that is part of the constellation of funding non-profit lawyers use to support those in court is alarming and deeply concerning, and we are advocating that the full funding be restored.
Outstanding Questions and Areas of Concern
Once again, a clear and transparent dataset and report of proposed revenues and appropriations was not presented by the Office of Budget Management. Given the questions listed above, it’s important to ensure that City Council members are empowered with the best information to develop the strongest budget for the City of Chicago.
We introduced a first step to improve transparency last budget cycle, but there is much more work to do in this area. Critical demands like programmatic metrics and department-submitted budgets are still lacking, and the OBM didn’t follow through on providing the statutorily mandated data.
Here are other areas of concern we have about the current budget proposal:
- Uncertainty around new forms of revenue. Many of the proposed forms of revenue, while well-intended, may not be fully realized, due to concerns listed above. If they are not realized, the City will need to find alternate means of plugging the budget hole. While other forms of revenue, like inflation-adjusted fines and fees (e.g. garbage), they may not have the votes to be realized, which prevents the City from being able to implement cost-of-service recovery for necessary city services.
- Continued lack of structural deficit balancing. The budget includes borrowing for $166M Firefighter and paramedic retroactive pay and $100M Legal settlements, which risks triggering a credit downgrade.
- Lack of clarity around operational efficiencies. The budget includes $7 million in special event cost recovery, while offering no details of how these costs will be realized, and $99.6 million in other efficiencies, which are not specified.
- Increasing personnel costs. While the City is instituting a hiring freeze, all-in personnel costs continue to go up year-over-year, which makes the current situation untenable without efficiencies or new reliable forms of revenue.
- Persistent vacancies. While we commend OBM on the process of starting to eliminate persistent vacancies, there are still budgeted vacancies subject to hiring freeze in this budget.
- Ballooning CPD costs. While CPD vacancies have been cut, overall funding to CPD is still increasing this year, even as total appropriations is decreasing for the entire city.
- Regulatory agency cuts. A Better Government Association (BGA) Policy analysis found that OIG, COPA, and CCPSA Departmental appropriations have not met the mandatory minimum floors. Instead, OBM adds estimates of “fringe” pension and benefit costs to meet the minimums, though this is not done for other departmental budgets. In the case of OIG, the city counts indirect costs assessed by a third-party Cost Allocation Plan towards the budget floor as well. Ald. Vasquez asked about these last budget cycle, and there has been no movement to fix this municipal code violation.
Learn More
If you’d like to dig into the budget data, you can check it out below:
- Budget Forecast
- Budget Recommendations
- Budget Overview
- Grant Detail
- Department Budget Hearing Documents
- Data Portal Datasets
- BGA Budget Analysis
We’d also love your feedback! If you haven’t already, please submit your thoughts via our 2026 Budget Survey by November 1st! We’re also hosting a Budget Town Hall on Tuesday, November 13th at 6pm with BGA! Come learn more about this year’s budget proposal, and bring your questions and feedback! Register at bit.ly/40BUDGET26.
