Chicago City Hall is pictured. [Don Vincent/The Daily Line]

A group of two dozen business, nonprofit and civic leaders unveiled their preliminary recommendations Tuesday to address the city’s $1.2 billion estimated budget gap for 2026, which include both ideas to raise new revenue and cut spending.

The 24-member working group, called the Chicago Financial Future Task Force and commissioned by Mayor Brandon Johnson through an executive order in April, will put out two main reports: this preliminary one, which focuses mostly on the 2026 budget, and a final report due in May, which will look more at long-term structural solutions to the city’s fiscal woes. 

The mayor told reporters Tuesday that to him, one of the report’s conclusions were clear.  

“The working group fully established that we do not have a spending problem in Chicago,” Johnson said. “We have a revenue challenge in Chicago.” 

The 83-page preliminary report includes 89 recommendations, including 45 cost-saving recommendations that would save between $372 million and $455 million depending on the extent of measures taken. It also includes 39 revenue-generating ideas that would bring in between $630 million and $1.65 billion depending on the extent of the policies implemented. Five other strategies were also suggested that don’t fit cleanly into either, such as a transition to outcome-based budgeting or a resolution to the dispute between the city and Chicago Public Schools on its non-teacher pension payment. 

Several alderpeople also served in an advisory role for the task force, but the co-chairs stressed to reporters that neither the alderpeople nor the mayor’s office had veto power or input into the report. 

Related: Mayor names members of new budget working group, including Council allies, labor, business and civic interests

While the report offers both spending and revenue ideas, it does say that the city has fewer places where it can cut to reduce the deficit while still maintaining critical services. 

“Expenditures are rising at a faster pace than revenues in the City. Implementing efficiencies alone would not close the budget deficit. The City must also review incremental revenue opportunities,” the report said. “The task force agrees that economic growth is crucial to the City’s future and will focus on economic development in the final report. However, the City cannot grow its way out of current fiscal challenges.” 

Expenditure-side options include an extended hiring freeze, flexible furlough days, employee health coverage plan changes, the elimination of the Chicago Police Department’s mounted unit, and cost recovery for private special events, fire alarm inspections, hazmat material responses and high-rise fires. 

On the revenue-generating side, options include a property tax hike tied to inflation — which is already mandated by ordinance but has been ignored the last three years — maintenance of the soon-to-be defunct state-collected grocery tax, an increase in the downtown rideshare surcharge, a liquor tax increase, a garbage fee increase, a definitional change to include online ticket resellers under the entities that must pay the city’s 9 percent amusement tax and a reinstitution of the city head tax. 

“Chicago faces real fiscal pressure, but we also have real, workable options,” said Chicago Urban League President and CEO Karen Freeman-Wilson, the co-chair of the budget task force. “These recommendations give City leaders a near-term playbook to improve operations, generate new revenue and pursue strategic opportunities while safeguarding essential services. If we act decisively now, we can protect residents today and put our city on a more sustainable financial path for generations to come.” 

The report estimated a potential $1 billion to $2.1 billion financial impact on the city’s 2026 budget if the recommendations were implemented — although not all of the ideas are within the city’s sole authority. Some would require state action, such as the expansion of the local and state sales tax to cover services instead of just goods. 

The report also highlights both the potential upsides and downsides of many of the options by offering dissenting arguments to some of the thornier ideas. 

“These are options, not mandates,” Task Force Co-chair Jim Reynolds, the CEO and chairman of Loop Capital, also said. “Our goal was to provide a clear, practical menu that balances impact, fairness and feasibility. The decision on what to advance belongs to City leadership, but the roadmap is here — and it’s built for both urgency and long-term stability.”  

For instance, the task force suggested extending the city’s hiring freeze on vacant non-public safety, non-revenue-generating or revenue-neutral positions into 2026. While that would save an estimated $143.7-161.7 million depending on how many vacancies are deemed “critical,” the group acknowledged that it could increase overtime costs and costs of contractual services. 

Additionally, the report says that while mandating one or two flexible furlough days could save between $9.4-18.8 million next year, the downsides could be reduced employee morale, higher turnover that leads to additional training costs, higher overtime and lower productivity.

Adjusting the city’s property tax levy for inflation would bring in about $56 million in additional revenue next year, but the report also points out that downsides could include reduced commercial investment and development and a loss in jobs that follows. 

But still, the report also argues the city’s suspension of Consumer Price Index (CPI)-based property tax levy increases in Fiscal Year 2023 is unsustainable in the long term. 

“The City needs its largest revenue sources to keep pace with inflation over time, or it will have a structural imbalance between revenues and service cost growth, which will require cutting services or raising other revenues,” the report said. “Many fast-growing communities have property tax rates that grow annually at least with the CPI.”

At the same time, the report also offers a counterargument, saying that growth of the city’s economy is one of the most important factors in reducing structural imbalance in the budget and that indexing property taxes to inflation would stifle growth. Still, the report paints economic growth as more of a long-term solution.

During a press conference Tuesday, Johnson also said he had already ruled out a property tax hike to close the 2026 budget gap, which is estimated at more than $1.15 billion. 

Finally, the report includes an estimate of revenue that would be earned from reinstituting the city’s corporate per-employee “head” tax, which was previously $4 per worker for businesses with more than 50 employees before it was abolished in 2013. Depending on how a renewed tax is implemented, the report estimated it could generate $10.2-25.6 million annually, but the report urged the city to consider whether business registrations increased after the tax was repealed and whether a new tax would disincentivize businesses from growing and hiring more employees.