As he crafts Chicago’s 2025 budget, Mayor Brandon Johnson has less time and not enough money.

The mayor faces a a budget deficit of almost a billion dollarsan increasingly undisciplined city council and a tight schedule to accomplish the most essential task of elected officials. This daunting challenge has some aldermen wary of an improbable but troubling worst-case scenario: Could the city fail to pass a budget by the Dec. 31 deadline?

Johnson and the council will likely achieve this, as the city does every year. But if a budget takes too long amid the accounting nightmare, the mayor’s political stumbles and the clock ticking, it could be a disaster.

“If this was not passed in time, we would be left with unpaid bills,” said Ald. Maria Hadden, 49th, said. “This is completely unacceptable.”

Experts believe that failing to adopt a budget on time could quickly threaten the municipality’s ability to provide many services and pay its employees. This could harm the city’s credit rating and increase borrowing costs while profoundly shaking Chicagoans’ trust in their elected officials.

These costly pitfalls should serve as a warning as the mayor and aldermen begin seriously crafting a budget, said Ralph Martire, executive director of the Center for Tax and Budget Accountability, a nonpartisan tax policy think tank.

“It’s not in anyone’s interest not to pass a budget deal,” Martire said.

After the deadline, “troubled waters”

Asked what would happen if the City Council and mayor failed to pass a budget within the state’s deadline, most aldermen were unsure.

“I’ve never experienced this before,” said Deputy Mayor Ald. Walter Burnett, 27th, longest-serving member of the city council.

Fiscal policy experts agreed that missing the deadline would push the city into uncharted territory. “It would be really troubled waters,” Martire said.

“To my knowledge, this has never been tested,” he added. “If there is no budget, there is no spending power. And if there is no spending authorization, maintaining its main activities then constitutes a real challenge for the city.

The city would be able to continue collecting taxes without a budget, Martire said. He also said Chicago government would have some leeway to continue spending money in the first quarter of the year, but added that the amount was unclear, since the law authorizing it to do so has not yet been tested.

A comparable impasse is that state budget crisis which has lasted for two years under former Gov. Bruce Rauner, Martire said. This standoff has damaged Illinois‘ bond ratings and continues to leave the state with vacancies in social services, he added.

And aside from the ability to perform well in the short and long term, “trust in the government process” is at stake, Martire said.

“Governments cannot function without budgets. This is in a way the essential task of elected officials,” he said.

Chicago nearly missed the Dec. 31 deadline during ruling Mayor Harold Washington’s so-called board wars, said Dick Simpson, a former alderman and retired University of Illinois at Chicago professor. During this period, Ald. Edward Burke would present an alternative budget each fall — a move the restive City Council could theoretically attempt again this year, but has yet to undertake.

“But (Burke) couldn’t overcome the veto. And at the last minute, they would compromise and come up with a budget so the city could continue to operate,” Simpson said.

Such a late shutdown could be made this year if necessary, Simpson expects. But if the city fails to pass a budget on time, it would be able to spend the money left in its coffers starting in 2024 and would likely have some wiggle room before having to pay the bills, but would not not able to pay bills that require new money. , he said. It would be difficult for the city to obtain much-needed cash from its anticipated tax revenues, he added.

“Things were going to continue for a little while. The water is not turned off on December 31,” Simpson said. “But that would be a disastrous situation.”

Simpson is even more troubled by the possibility that a budget will pass, but with deep service cuts, he said. He fears less frequent trash pickup, reduced funding for poverty-focused programs and reduced pension payments.

Despite multiple interview requests from different city departments, including the mayor’s office and its finance and legal departments, the Johnson administration declined to discuss what would happen after the Dec. 31 deadline.

Rating agencies will also closely monitor the city’s budget process. Agencies could reconsider Chicago’s creditworthiness if a budget impasse hurts core services or changes how the city’s “management effectiveness” is perceived, said Fitch Ratings analysts Ashlee Gabrysch and Michael Rinaldi.

“It depends on how long the standoff lasts,” Rinaldi said. “Not passing a budget creates uncertainty.”

However, analysts say they are more concerned about how Chicago’s budget deficit will be closed, not if. They will closely monitor whether the budget continues to advance pension payments, uses outlandish revenue assumptions, plugs holes using reserves or opts for “sustainable, recurring measures,” Rinaldi said.

“There’s a big question about whether the city will decide that it’s going to make a tough decision this year or whether it’s going to resort to previous bad practices of one-off solutions,” Gabrysch said.

An undisciplined board, a difficult budget

The race for Chicago’s 2025 budget is already behind schedule. Johnson had originally planned to unveil his budget in mid-October, but late last month he postponed the planned presentation until next Wednesday.

Asked about the new timetable, Johnson argued that it was “not a delay” because it falls before the statutory deadline of December 31. Postponement could be a tactic, Ald. » declared Gilbert Villegas, 36th. Villegas speculated that labor groups might try to pressure aldermen to increase loans, taxes and fees to avoid cuts during the shortened deadline.

“But I think they underestimate the members,” he said, adding that he wants aldermen to set their own budget to increase their negotiating ability.

The mayor’s administration has been signaling for months that the city may need to make significant budget cuts or significantly increase revenue to balance its books. He has asked department heads to undertake a modeling exercise for redundancies – although he calls such cuts “dramatic and severe” last resort measures. And he has said he is open to raising property taxes, a certainly unpopular measure that he opposed during his election campaign and avoided last year.

The layoffs would lead to backlash from Johnson’s key labor allies. An inability to spend could discourage his progressive aldermanic partners, who want big investments in the bold new policies he has long promised. The new taxes will likely encounter strong resistance from the more moderate and conservative wings of the City Council.

And because Johnson postponed his budget presentation, he has much less time to fix the problems. The budget vote currently scheduled for December would be the city’s last since 2009.

That tight schedule will be made even more difficult by Johnson’s strained relationship with the council, where a growing number of rebel aldermen have joined forces in new, broad coalitions to oppose key decisions made by the mayor. They rejected his choice for zoning board chair, tried to force his hand to keep the ShotSpotter system and united to challenge his school board overhaul.

Ald. William Hall, 6th, charged with Johnson with leading the City Council in finding new revenue, said he wasn’t bothered by the challenge.

“This mayor is moving at a pace that is focused on sustainability, not just knee-jerk reactions, not just adding Band-Aids,” Hall said.

Still, Hall predicted that the mayor’s “obstructionist” opponents on the City Council would initially speak out against Johnson’s budget. But he hopes aldermen will come together to pass a spending plan before the deadline.

“Of course they’re going to give their best, Oscar-winning performance,” Hall said. “I think once my colleagues sit down and think carefully about the faces and the people who depend on them, things will stabilize.”

Some aldermen have already begun exploring the possibility of using a “continuing resolution” to create an interim budget if necessary, Ald. Bill Conway, 34th, said.

“If we get to that point — and I hope it doesn’t — we’ll have to do it in a way that there’s no breakdown in essential services,” Conway said. “But it would be terribly disruptive to the city.”

The budget is the product of financial expertise and technical skill, said Hadden, co-chair of the council’s progressive caucus. But it’s also the product of diplomacy and negotiation, she added – things, she says, are currently in “deficit” at City Hall. The city council doesn’t have access to budget resources, so it’s up to the mayor to come up with the basis for a budget, Hadden said.

“This is probably the largest compromise bill that the mayor’s office works on each year,” she said.

It may be more difficult to convince aldermen to embrace this compromise because of recent consecutive resignations people charged with leading the Johnson City Council’s lobbying efforts. But aldermen will do everything they can to make sure something passes, Hadden said.

Everyone on the City Council understands there will be “major conflicts,” said Ald. Chris Taliaferro, 28th, said. He’s eager for a budget to be passed and especially fears the possibility of cuts to policing, he said.

But he doesn’t know what to expect if the new year comes and the city doesn’t have a budget.

“I’ve never crossed the bridge.”

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