With a $1.12 billion budget shortfall and $3 billion more in federal funds on the chopping block, Mayor Brandon Johnson on Monday cracked the door open to the prospect of layoffs and service cuts that he has previously ruled out.
“We will have to deal with the realities of the billions of dollars that are being threatened by the federal government. That’s a different scenario than we were under before,” Johnson said as he signed an executive order establishing a working group to advise him on ways to confront the city’s fiscal challenges.
“But I am confident that the collective groups of the city of Chicago will stand firm in our values to ensure that we are investing in people — but we also have to make serious considerations based upon the Trump takeover,” he said.
Chicago Federation of Labor President Bob Reiter said he looks forward to participating in the working group tasked with producing preliminary findings by Aug. 31 and a final report on May 31, 2026.
Those findings are expected to include a combination of operational efficiencies and progressive revenue that Johnson campaigned on delivering, but have so far eluded the mayor because of his strained relationship with Gov. JB Pritzker and his anemic track record in Springfield.
“We’re always going to try to preserve services to residents, which is what the function of the city is to do,” Reiter said. “People are more vulnerable now than they ever have been. So I don’t ever believe that cutting jobs or cutting services is a way to combat a crisis.”
Reiter said there have been “a lot of things that labor has suggested over the years that haven’t been utilized by any administration.”
Reiter was not talking about eliminating the “sacred cows” of city government: three employees on a garbage truck and the requirement that five fire department employees be assigned to every piece of fire apparatus, with the exception of daily “variances.”
“The term ‘sacred cow’ is pejorative because we don’t always have to go after work rules, workers’ jobs or service cuts in order to save money,” Reiter said.
Ralph Martire, executive director of the Center for Tax and Budget Accountability, said the structural deficit that Chicago is facing has been handed down from administration to administration for decades.
It cannot be resolved “unless you have everyone at the table and you have everything on the table” — and Johnson’s executive order “does precisely that,” said Martire, who attended Monday’s signing ceremony.
“We get the business community there. We get community activists. We get labor. … We will have the full opportunity to put everything on the table, to look at what has actually created this structural imbalance for decades and finally create a chance to fix it,” Martire said. “That’s based on the evidence, that’s based on best practices that avoids the blame game.”
Chicagoland Chamber of Commerce President Jack Lavin said business leaders “stand ready to participate and help,” while hoping to persuade Johnson to steer clear of the business taxes he championed during his mayoral campaign.
“This is a chance to look at shared sacrifice. … You can’t just look to taxing the business community or higher taxes for residents,” Lavin said. “If you’re too much on one side raising revenues then you’re going to slow job growth, and if you slow job growth, your deficits are going to grow.”
For two years, Johnson has refused to entertain the possibility of layoffs or unpaid furlough days for fear it would alienate the unions that put him in office.
Instead, the mayor who campaigned on a promise to hold the line on property taxes, proposed a $300 million property tax increase, only to have the City Council unanimously reject a property tax increase of any size.
The standoff resulted in a marathon budget stalemate that dragged on until a 27-23 vote mid-December for a budget that hit Chicagoans wallets in other ways — by adding an amusement tax on streaming services; higher taxes on cloud computing, business software and equipment leases and higher taxes on parking and downtown congestion.
But the fiscal landscape has changed substantially since last summer, when Chicago’s three-year financial forecast anticipated a $1.12 billion shortfall in 2026 and a $1.32 billion gap in 2027.
President Donald Trump has threatened to cut more than $3 billion in federal funding to Chicago for services ranging from public health, mental health, the environment and education to aviation, roads and mass transit.
Trump’s on-again-off-again tariffs could also trigger a recession and travel slowdown that affects city revenue.
Last week, Johnson characterized as “terrorism” Trump’s threats to withhold billions in federal funding from sanctuary cities and cut off funding to school districts in Chicago and other major cities that adhere to diversity, equity and inclusion policies.
Conspicuously absent from Monday’s signing ceremony was Civic Federation President Joe Ferguson.
Last fall, the Civic Federation laid out a smorgasbord of revenue-raising and cost-cutting options that included: requiring city employees to take one unpaid day off every two weeks; cutting city executives’ pay by 10% and “reducing and recalibrating” staffing at the Chicago Fire Department, which now spends 70% of its time responding to calls for emergency medical assistance and only 30% on fire suppression.