Layoffs on table because of budget shortfall, Chicago Mayor Brandon Johnson administration officials say

A.D. Quig, Chicago Tribune on Jul 16, 2026

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CHICAGO — Mayor Brandon Johnson’s budget team put city employee layoffs on the table Thursday to help close a budget deficit they said could reach $90 million through the end of this year.

While acknowledging the final shortfall wouldn’t firm up until next month, Budget Director Annette Guzman told aldermen at a Budget Committee meeting that they would need to find fresh cuts or revenues in order to close it before the end of the year.

Thursday’s hearing recapping the city’s midyear report — a check-in on how revenues were performing and whether expenditures are on target through May — was a public forum for the ongoing fight between the Johnson administration and opponents over the city’s 2026 spending package.

Johnson’s team and allies went on the attack regarding revenue falling short of expectations in the budget passed by anti-Johnson aldermen over the mayor’s objections. Aldermen opposed to the mayor argued back that those revenues are only underperforming because Johnson’s team slow-walked implementation.

Mayoral ally Will Hall, 6th, asked Guzman how many workers the city would need to lay off to cover the entire gap.

“If we’re looking at a $90 million gap, that equates to about 2,000 city jobs on the corporate fund, to be exact,” Guzman said, affecting workers at Streets and Sanitation, the Department of Transportation, and especially, the Chicago Police Department. “There’s no way to do it without hitting CPD. They’re the highest wage earners in the city and they also, percentage wise, have one of the largest workforces.”

It’s a political long-shot that layoffs would be that big: such reductions would incense unions and potentially lead to service cuts for Chicagoans while aldermen and the mayor head into the 2027 election. But Wednesday’s sometimes-tense back and forth didn’t suggest any decisions would come easy.

To be the most effective, layoffs would need to start in September, Guzman said. Many union bargaining agreements have a 60-day notice period before layoffs can be implemented.

“The longer you wait to do the cuts, the less money you’re able to generate from it, which means that you’d have to go even deeper and do more positions,” she said.

Johnson said last week he was “working hard to avoid layoffs and cutting services” in the meantime.

Budget officials also revealed Thursday that extra payments to help shore up the city’s grossly underfunded public pensions are being threatened by late property tax billing.

A key budget demand by aldermen opposed to the mayor last year was for Johnson to sock an extra $260 million into the city’s pension funds, a move designed to make sure the funds don’t have to sell assets to make good on retiree checks. Because of a cash crunch, Johnson’s team broke that payment in two, and already made the first this year.

On Wednesday, his team stopped short of promising to pay that second $130 million — blaming worries that property tax dollars from the county will again come in late.

“One of the challenges, which we are facing this year and we faced in prior years, is delays in property taxes from Cook County,” interim chief financial officer Steven Mahr said. “We are trying to manage that cash flow issue this year by analyzing when we may be able to make the second installment.”

Bills are currently slated to be due by the start of October instead of the end of August. That means revenues will be late coming into city coffers, too. Last year’s delays and separate calculation troubles meant some governments weren’t being paid until December, January or later.

The county treasurer’s office has been slowed down by distribution problems, where some schools, villages and libraries were over- or under-paid. A treasurer’s office spokesman said Wednesday the office is currently holding on to $400 million to cover true-up costs when the calculations are finally straightened out.

The projected shortfall for this year — and the anticipated deficit for 2027 – will be announced in the coming weeks.