CHICAGO — Chicago ended 2025 with $219 million more than expected in its main operating fund thanks in large part to solid tax collections and many departments spending less than they were supposed to, a top official in Mayor Brandon Johnson’s administration said as the city unveiled its annual financial report.

Adding to the good news: the overall funding levels of its fragile pension funds improved. But long-term liabilities climbed by $1.9 billion and the city’s reserves shrunk further.

“Overall, on a cash basis, we had a very good result for the general fund. The enterprise funds are solid, and the pension funds are solid, so it reflects, I think, progress over previous years,” Comptroller Mike Belsky told the Chicago Tribune on Tuesday. “When you look at what’s under our control, we do a really good job.”

But the city’s “unallocated” reserve balance — what some experts dub the most closely watched number in municipal finance that signals the city’s fiscal wiggle room — went from $0 in 2024 to -$52 million in 2025. That means if there’s some kind of financial emergency, Chicago’s government will struggle to find the cash on hand to help deal with it.

Including money left over from the sale of the Skyway and parking meters that the city counts as budget stabilization funds, overall reserves are just over $700 million. That’s down from both a high of $1.9 billion, when the city was flush with federal pandemic relief cash, and from the pre-COVID balance of about $1.1 billion. The city wiped out much of that balance in recent years to make extra pension payments, leaving little for outright emergencies or major unexpected costs.

Besides the pension payments, city officials say the negative balance was also driven by a major ill-timed one-off: the cost of retroactive pay owed to firefighters hit the 2025 ledger, but the $166 million the city borrowed to pay for it landed this year. Steven Mahr, the city’s interim chief financial officer, said he expects that balance to turn positive by the end of 2026.

The ACFR, as it’s known, is a backward-looking report that measures how the city’s budgeted spending and revenues performed against expectations. It also offers insights into the performance of other major funds for long-term debt, airports and water systems, and pensions.

The ACFR is one of several releases in the run-up to budget negotiations. Still to come is the grand reveal of next year’s projected shortfall and the mayor’s proposals to fill it. Last week, his appointed working group released a menu of long-term fixes city leaders could pick from to address the city’s persistent structural budget gaps, longstanding debts and pension obligations. Many with the biggest impact would require state permission city leaders have struggled to get, or would be difficult for aldermen to agree to, especially in an election year.

In 2025 alone, Chicago’s total liabilities went up by roughly $2 billion, thanks to rising estimated costs to pay back long term debt and lines of credit, needed reserves to pay for retiree benefits, and expected costs for legal settlements.

The extra payments to the city’s four pension funds over the past three years likely helped make a dent, though all are still drastically underfunded. Those “supplemental” infusions were made to make sure pension managers didn’t have to cash out investments to afford benefit payouts.

More money staying in investments, officials hoped, would lead to higher returns. All four pension funds did see higher investment returns in 2025 than 2024 after years of extra payments, according to the report. Taken together, the fair-value funded ratio measuring how much the funds have to pay for future benefits rose slightly from 25.63% to 28.15%. Their combined liability is still about $36.4 billion, according to the report.

The city, meanwhile, did cash out billions from its investments to make sure the pension funds received money on time and to pay other debts. Mahr said a “major driver” of the investment drawdown was property tax revenues coming in late. Problems with the long-running upgrade of the county’s property tax systems have delayed bill mailing and screwed up payments to taxing bodies, including the city, CPS, and hundreds of suburban park, school and library districts.

Revenues in the city’s main operating “general fund” were 7.5% higher than in 2024 — up about $20 million compared to expectations — while spending was $200 million under budget. Nearly every city department, including some of the biggest, kept their expenses down: fleet and facilities management, streets and sanitation, and the department of family and support services together saved nearly $46 million.

Part of those decreases, according to the report, was less money going out the door than planned to homeless services and early childhood education. The city set aside $50 million for homeless services but spent $38 million, and planned $11 million in spending on early childhood education but spent $9.4 million. The department of public health also spent about $3 million less than planned on violence reduction, according to the report.

The Chicago Police Department, by contrast, continued its trend of going over budget, exceeding its $1.8 billion allocation by $162 million. That came from personnel — overtime, according to Belsky – and the cost of settlements and outside counsel. The city budgeted $82.5 million for the latter, but the department spent $131 million.

Transaction and transportation tax revenues saw a big boost year over year, according to the report. Aldermen changed congestion surcharges on ride share trips as part of the 2025 budget, charging weekend riders for the first time while boosting fees on parking garages, permits and passes. In all, that brought in $460 million, up from $413 million in 2024. Charges on things like car and property leases, cloud computing software and online work tools brought in $1.1 billion thanks to the city’s rate hike in 2025. That’s up from $853 million the year before.

The city’s enterprise funds were also in better shape at the end of last year. O’Hare International Airport’s operating revenues were up $108.7 million thanks to higher terminal charges and landing fees after a rebound in business travel. Midway International Airport revenues were up $21 million.

“Thoughtful budgeting, accurate revenue forecasting, and careful stewardship of taxpayer dollars helped produce a significant surplus while strengthening the City’s financial foundation,” Johnson said in a release. “These results put Chicago in a stronger position to continue delivering the services residents rely on and investing in our neighborhoods.”

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