Today, Mayor Brandon Johnson will present his 2027 budget and his plan to close an $882 million gap. And, he will once again call on corporations and the city’s wealthiest residents to pay more. What the mayor rarely talks about, though, is what we are already paying for — and how little we are getting for it.
To see how Chicago stacks up, I reviewed the budgets of the nation’s 10 largest cities beginning with 2019, the last year before federal pandemic aid drove a surge in municipal spending nationwide. Since then, the city’s main operating fund, the Corporate Fund, has grown by $2.4 billion, or 64%, to $6.25 billion — more than double the 30% rate of inflation. Only Phoenix grew its budget faster. Adjusted for inflation and population, Chicago’s spending per resident rose the fastest of the 10. Spending above inflation since 2019 has added $1.3 billion to the annual budget — more than the entire $882 million projected deficit.
Now, let’s consider what that spending has produced. From 2019 through 2024, the latest year of local economic data, Chicago’s budget grew 22% after inflation, while our economy grew only 5%. That 17-point gap was the widest of the 10 cities. The next widest, Philadelphia’s, was six points. All that extra spending failed to generate a commensurate economic return.
Rather than confront that disconnect, the mayor remains fixated on raising taxes. Recently, he finally acknowledged that Illinois’ constitution limits Chicago’s ability to tax “the ultra-rich and big corporations” without state approval, urging Springfield to tax them or let the city do it — which would mean a city income tax on top of the state’s. While the city can always hike existing levies, piling on more taxes only undermines the economic and job growth Chicago needs to sustainably generate additional revenue.
Instead, the city’s job market is heading in the wrong direction. Chicago’s countywide unemployment rate hit 5.9% in August — the highest among the nation’s 25 largest cities and well above the U.S. rate of 4.3%. Over the past year, it rose 1.2 percentage points while the national rate fell. All of the Chicago area’s job growth came from government, where payrolls grew by 15,400. Private employers shed 4,700 jobs.
To employers, the mayor’s agenda reads like a warning sign. State and city levies make Chicago one of the costlier places in the country to do business, and the mayor has refused to rule out reviving his per-employee head tax — a tax on employment itself. With private payrolls stagnant, it is the wrong message to send.
The city’s old fallback won’t work either. For years, it papered over budget gaps by borrowing and refinancing. Retiring older general obligation debt by issuing higher-rated sales tax securitization bonds, for instance, reduced interest costs and delivered relief up front. But that strategy depended on falling interest rates.
When I testified to the City Council’s Finance Committee in June 2025, I warned that a regime of rising rates would make it increasingly costly for the city to refinance and borrow its way through deficits. The city’s recent sales-tax bond refinancing
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proved the point: Rising rates cut its projected savings from $65 million to $71 million to $36 million. Chicago’s general obligation bonds tell the same story: The 10-year rate is up 65 basis points since June 2025, while longer-term bonds now yield over 6%. And in a sign of deteriorating investor perception, the city’s 10-year credit spread over the BBB municipal benchmark now stands at 55 basis points — converging toward junk credit pricing — even though BBB is its nominal credit rating.Borrowing to plug an operating deficit is imprudent. At a 6% borrowing rate, a $650 million bond sale like the one planned for later this month would cost $39 million a year in interest alone. Regardless, the city’s debt bills are rising. By its own forecast, scheduled payments on general obligation and sales-tax bonds will climb 24% by 2029, to more than $1 billion a year, just as the annual budget gap tops $1 billion. Yet on Oct. 9, the mayor vetoed a measure that would have raised the City Council’s voting threshold for issuing new debt — hardly the move of someone who takes rising debt costs seriously.
Debt is just one of the fixed costs squeezing the budget. As I’ve written in these pages before, Chicago’s pension hole is enormous. Contributions have more than doubled since 2019, to $2.85 billion a year, and the city’s four funds are still just 28% funded. Pensions and debt service consume almost 40% of the operating budget. Short of drastic reform, the only way to manage fixed obligations of that scale is through operating leverage — growing the tax base faster than those obligations rise. Chicago is on the wrong side of that math, with fixed costs climbing far faster than the economy carrying them. Each private job broadens the base for sales and property taxes without raising a single rate; taxing hiring does the opposite.
Higher interest rates have ended the era of easy borrowing, and squeezing more revenue out of a private sector already struggling to hire and invest will only weaken the tax base further. A credible 2027 budget must pair real spending restraint with policies that encourage economic growth. Until City Hall makes that pivot, Chicagoans risk paying more and getting less.
Stuart Loren is a managing director at Fort Sheridan Advisors, where he manages client investment portfolios and is responsible for market and economic analysis. Formerly, Loren was a corporate lawyer in Boston. He lives in Chicago with his family.
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