Chicago ends 2025 $52 million negative, no cash cushion

Chicago ends – Chicago’s 2025 financial picture closes out with an unassigned negative balance of $52 million in its operating checkbook, even as City Hall points to a $219 million budgetary surplus. The shift is tied to accounting charges for retroactive firefighter pay and

Chicago ended 2025 with a number that doesn’t fit neatly into any feel-good headline: an unassigned operating balance of negative $52 million — down from zero in its checkbook — even after spending controls and higher-than-expected revenues.

The annual city audit released by Deloitte & Touche LLP shows that, compared with the lows of 2024, Chicago made a $381 million turnaround. But the city’s bottom line still leaves it in a precarious place: there’s no cash cushion to lean on if the next round of bills comes in heavy.

Acting Chief Financial Officer Steve Mahr said the city would have closed 2025 in the black if not for how certain costs were booked. He pointed to $166 million in retroactive pay raises for Chicago firefighters, which had to be charged to 2025 for accounting purposes. The pay was backed by $449.3 million in city borrowing that also covered large settlements, Mahr said.

City Hall, for its part, emphasized a separate measure: a $219 million budgetary surplus. That surplus is a $381 million improvement from the previous year, and Mahr framed it as meaningful because the city’s finances had been under strain.

Mayoral politics has been just as tight. Mayor Brandon Johnson has struggled to push his last two budgets after an emboldened City Council rejected his proposed $300 million property tax increase and shot down his corporate head tax. Council approved an alternative budget that included video gambling terminals and other major elements Johnson did not support.

But if Johnson is aiming for a second term, Mahr said the numbers offer some leverage. He told the Sun-Times the year’s surplus represents the largest the city has had over the last decade with the exception of 2021 and 2022 — years that were “pandemic-inflated” due to $1.9 billion in federal relief funds.

Spending, he said, didn’t run away during the same period. City spending ballooned during the pandemic, but after that it “only increased by 0.6%,” following $199.2 million in operational efficiencies made by city departments that came in below budget.

The trouble is that what looks like improvement in the short term hasn’t translated into a deep reserve.

Reserve funds — including long-term revenues generated by the sale of the Chicago Skyway and Chicago parking meters — are down from $1.1 billion before the pandemic to $700 million. Mahr said that drop is tied largely to supplemental pension payments that began under former Mayor Lori Lightfoot and continued under Johnson. This year’s $260 million pension advance was divided into two parts, with the second half not yet paid.

Revenue growth helped City Hall fight its way back. Revenues rose by 7.5% from one year to the next. with tourism. transportation. recreation and transaction taxes all coming in higher than expected. Revenues at O’Hare and Midway Airports also rose. Mahr also pointed to higher investment income driven by a booming stock market propelled by a handful of AI giants.

A similar investment windfall benefited four city employee pension funds that have been hovering dangerously close to insolvency.

Even with the improved aggregates, Chicago still faces a staggering pension crisis. The city confronts a $35.1 billion pension crisis that will be made $11 billion worse over the next few decades, thanks to a police pension sweetener signed by Gov. JB Pritzker.

Still, Mahr said the “aggregate funding ratio” of the four city employee pension funds improved slightly in 2025, moving from 25.63% to 28.15%.

The longer-term debate now circles back to property taxes — the issue that can set Chicago’s political temperature dangerously high. The Johnson-appointed Chicago Future Financial Task Force has suggested reinstating the automatic escalator that locks in annual property tax increases at the rate of inflation. Lightfoot imposed the automatic increase before stopping it in her final budget.

On Wednesday, Mahr was pressed about whether the mayor might recommend a property tax increase before the 2027 mayoral election, which is often treated as Chicago’s third rail.

“We are leaving all of our options open. We are evaluating options all the time. We are in the season now of thinking about the 2027 budget. Options remain open to us,” Mahr said. “I won’t speculate what City Council will or won’t do.”

The scale of Chicago’s pension burden has only grown. In 2015, the city’s annual pension contribution was roughly $500 million. It’s now roughly $3 billion.

Mahr said the city has tried to keep up with required payments.

“The city has successfully and effectively climbed that ramp. We’ve made our statutory contributions pursuant to state law and we’ve made these supplemental contributions for the past three years. This year will be the fourth year,” he said.

That push — and how quickly school and city finances can collide — has been part of the year’s story. In August. 2025. Johnson told reporters he expected Chicago to close the books on 2025 in the red for the second straight year after the Chicago Board of Education balked at authorizing a short-term. high-interest loan to reimburse the city for a $175 million pension payment for non-teaching school employees.

At the time, the city had been expected to end 2025 with a $146 million shortfall due to the school board’s defiance, a board partially elected and still controlled by Johnson’s own appointees.

But the dire prediction didn’t hold. Johnson later declared a record $1 billion tax increment financing surplus to bail out Chicago Public Schools and bankroll the new teachers contract. Under pressure from the City Council. CPS made the full pension payment to the city. and City Hall said that. along with higher than anticipated tax revenues and spending controls. helped Chicago end 2025 in the black.

For all the turnaround messaging, the audit’s central reminder is stark: the city may be closing out the year with signs of financial improvement, but its operating books still show a negative $52 million and reserves that have been drawn down to a level that leaves little margin for error.

Chicago finances Deloitte & Touche audit operating checkbook pension crisis property taxes Brandon Johnson Steve Mahr Chicago firefighters tax increment financing Chicago Future Financial Task Force