CHICAGO — City officials confirmed Monday that Chicago closed 2024 with a $161 million budget deficit, largely due to police department overspending, an unpaid pension bill from Chicago Public Schools, and a drop in corporate tax revenues.
The shortfall was revealed during a financial update following the release of the city’s 2024 Annual Comprehensive Financial Report.
Police Overspending Drives Massive Budget Breach
According to the new financial data, the Chicago Police Department (CPD) exceeded its approved $2 billion budget by $207 million, including $127 million in unplanned personnel expenses — despite roughly 1,000 job vacancies within the department.
In addition, CPD spent $80 million more than budgeted on lawsuit settlements, continuing a troubling pattern. A similar issue occurred in 2023, when the department went over budget by $242 million, according to WTTW News.
Chicago Public Schools Skips $175M Pension Payment
A major budget strain also came from Chicago Public Schools (CPS), which refused to reimburse the city for a $175 million pension payment made for non-teacher staff.
Budget Director Annette Guzman said if CPS had covered the amount, Chicago would have ended 2024 with a budget surplus.
The city expects this reimbursement to be factored into CPS’s 2025 budget, and officials continue working to resolve shared financial obligations between the city and the school district.
Reserves Depleted to Patch the Gap
To avoid defaulting, the city used its “unassigned fund balance” — a pool of discretionary funds — to cover the shortfall. However, it did not tap into the official rainy day fund.
City staff also trimmed $399 million in general fund spending, including $132 million originally slated for debt payments, to manage the financial hole.
Corporate Tax Revenue Came Up Short
Compounding the issue, Chicago saw an $80 million corporate tax shortfall. Officials say the decline stemmed from weaker-than-expected business activity.
Even so, the city retains nearly $11 billion in total fund balances, in line with recent historical averages — providing a limited buffer heading into the next budget cycle.
2025 Budget Starts Strong, But Red Flags Remain
So far in 2025, the city has reportedly spent 4% less and taken in 5% more revenue than projected. Yet budget officials remain cautious. The police department has already surpassed its early-year caps, logging $45.5 million in overtime and $39.3 million in settlements.
At the upcoming July 21 City Council Revenue Subcommittee meeting, alderpersons are expected to explore new revenue proposals, including legalizing video poker and slot machines in Chicago bars and restaurants. But an economic analysis warns such a move could threaten the viability of the planned Chicago casino in River North — expected to open in 2026 — and cost approximately 400 jobs.
What’s your take on Chicago’s growing budget gap? Should city leaders cut spending, raise new revenue, or hold departments more accountable? Share your thoughts in the comments at ChicagoSuburbanFamily.com.
