This story was originally published by City Bureau on Oct. 16, 2020.

City Bureau presents a guide to who makes money move in the city’s annual budget process. 

What is Chicago’s annual budget process?

The budget process takes place from July to December with a new budget enacted on Jan. 1 of each year. Starting in July, city departments work with the Office of Budget and Management on their financial needs for the next year’s budget. By September, the mayor’s budget forecast is shared with City Council and the public. 

In mid-October, the mayor must propose a budget to City Council which will then host lengthy hearings, including at least one public hearing (this year, it’s on Nov. 16) where Chicagoans can make public comment. Aldermen typically vote on a spending plan in November and by law they must pass a budget by Dec. 31.

What are the different parts of the budget?

When City Council votes on the annual budget, they are approving the spending plan for all six parts in the budget, also known as funds: corporate, enterprise, grant, special revenue, pension and debt service. The budget is not one big piggy bank; each fund allots dollars to specific services and programs in the city. 

The corporate fund, or the general operating fund, makes up a bulk of the budget and supports a range of public safety, public health and city services. This includes the Chicago police and fire departments, trash and recycling pickups, and street repairs. The Chicago Police Board and the Civilian Office of Police Accountability also fall under this category. For larger, long-term capital improvement projects, like curb and gutter repairs, the city leans on its debt service funds, which includes general obligation and revenue bonds and loans. 

With the enterprise funds, the city is able to operate, maintain and invest in capital projects for its water and sewer systems and two major airports, O’Hare and Midway. These funds are “self-supporting,” which means revenues come from charges and user fees. For example, residents and businesses pay for water service charges, and airlines fund the airports’ operations through landing fees and terminal rent.

The city has received grant funds from federal, state and local governments, as well as private organizations, to help support programs for youth, seniors, community development and many more. In 2020 projections, the city anticipated $1.76 billion in grant funds, which would’ve made up 14% of the total budget.

The best way to understand special revenue funds is to look more closely at certain taxes. Fees collected from vehicle stickers, impoundment or towing are another source of the city’s revenue. With vehicle stickers costing around $90, the city sought to earn $129 million in revenue this year from that tax alone. Residents also pay a $5 surcharge on their monthly cell phone bill to help fully fund the Office of Emergency Management and Communications (the city’s 911 service line). 

Pension funds round out the rest of the budget and pay pensions for city workers such as police officers and firemen. These funds – which are divided into four separate pension accounts – include retirement, death and disability benefits for city employees and their beneficiaries. 

How many aldermen need to vote ‘yes’ to pass the budget?

At least 26 must vote ‘yes’ to pass the budget. Last year, 11 of the 50 aldermen rejected Mayor Lightfoot’s $11.65 billion budget; six Democratic Socialist aldermen said they would vote no due to “an over-reliance on property taxes, an ‘overfunding’ of police and the new minimum wage that leaves out tipped workers, such as restaurant servers,” according to a WBEZ report. Their dissenting votes were considered bold since mayoral budgets often receive a “nearly unanimous” rubber stamp approval in City Council.  

In 2012, reporter Mick Dumke wrote in the Chicago Reader that no more than three aldermen voted against a mayor’s budget proposal between 1990 to 2013. “The most opposition came in 1991, Daley’s third year on the job, when 18 aldermen said no to the mayor’s 1992 budget,” Dumke wrote.

How much power do the aldermen have compared with the mayor in the budget process?

In theory, Chicago’s City Council has a “weak mayor” since the aldermen have some legislative powers, including voting on the annual budget. In practice, City Council has historically operated with a “strong mayor” where the mayor acts like a chief executive officer, including exercising the right to veto. “Structure makes the mayor weak, politics make the mayor strong,” Larry Bennett, emeritus professor of political science at DePaul University, told City Bureau in 2019.

In recent years, aldermen have been widely criticized for not showing up to required meetings and hearings, including budget hearings. Back-to-back budget hearings are scheduled to “scrutinize each department’s budget” soon after the mayor reveals a budget plan on Oct. 21, taking place over a span of almost two weeks, before aldermen vote.  

“Many aldermen believe the biggest problem in Chicago government is its deeply flawed budget process, in which the mayoral administration crafts and presents a budget that aldermen have a couple of weeks to look over before deciding whether to vote for it. Most aren’t able to study more than a few portions of it, even if they’re willing,” wrote Dumke in a 2009 Chicago Reader article

How does Chicago’s one-year budget process compare to other cities which may have a multi-year process?

Chicago operates on an annual budget cycle, allocating money for one year. While this is common in other large American cities such as Philadelphia, New York City and Los Angeles, some cities such as Oakland and Richmond allocate money for a period of two years. 

Biennial budgeting can provide a city with a greater, wider understanding of how debt, inflation, pensions and more will impact the city in the future and complement long-term strategic plans

Do you have any remaining questions about the city of Chicago’s 2021 budget? Are you still curious about how the city’s budget works? 

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