Rules shall be in effect at all times that a viewing gallery or
room is open for a meeting of the City Council or any of
its committees. All individuals and their belongings are subject
to search at entry or upon request.
Individuals must remain seated at all times except,
one, when entering or exiting the gallery.
Two, when providing public comment during the portion of a meeting
set aside for that purpose.
Or three, when asked to rise and be acknowledged by a member
of the City Council.
Profane, threatening, harassing, abusive,
or defamatory behavior or speech, which in the
judgment of the meeting's chair or the sergeant-at-arms may
lead to a breach of the peace or disrupt the orderly conduct
of the meeting is not permitted. Disruptive or distracting
actions, such as the stomping of feet, waving of arms,
throwing any item, whistling, booing, shouting,
or other loud utterances are not permitted when in the judgment of the
meeting's chair or the sergeant at arms, such actions are
disrupting or impeding the orderly conduct of the
meeting. Any item that poses a potential safety
hazards, as determined by the sergeant at arms, is prohibited
in the gallery.
Such items include, but are not limited to, one, any
pointed objects, including knives of any kind.
Two, banners, flyers, or other forms of signage.
Three, food and beverages, including in glass or
metal canisters. Four, backpacks, large
bags, and sealed packages. Clear bags, not tinted in
color, that do not exceed 12 inches by six inches by
12 are permitted and subject to search.
And five, firearms, ammunition, fireworks,
laser pointers, stun guns, tasers, mace pepper
spray, and toy weapons. Cell phones and other small
handheld recording devices must be placed in silent mode,
can only be used while seated, and can only be used in a
manner that does not interfere with the ability of other
individuals to view or hear the proceedings.
Individuals or groups failing to adhere to these rules
will be subject to removal from the remainder of the meeting by
the sergeant at arms.
City of Chicago City Council Rules of Conduct for Public
Meetings, 2023 to 2027.
Pursuant to Rule 58 of the Chicago City Council Rules of
Order and Procedure, the sergeant at arms sets forth the
following rules of conduct for members of the public.
These rules shall be in effect at all times that a viewing
gallery or room is open for a meeting of the City Council or
any of its committees. All individuals and their belongings are
subject to search at entry or upon request.
Individuals must remain seated at all times except,
one, when entering or exiting the gallery.
Two, when providing public comment during the portion of a meeting
set aside for that purpose.
Or three, when asked to rise and be acknowledged by a member
of the City Council.
Profane, threatening, harassing, abusive,
or defamatory behavior or speech, which in the
judgment of the meeting's chair or the sergeant at arms may
lead to a breach of the peace or disrupt the orderly conduct
of the meeting is not permitted. Disruptive or distracting
actions, such as the stomping of feet, waving of arms,
throwing any item, whistling, booing, shouting,
or other loud utterances are not permitted when in the judgment of the
meeting's chair or the sergeant at arms, such actions are
disrupting or impeding the orderly conduct of the
meeting. Any item that poses a potential safety
hazards, as determined by the sergeant at arms, is prohibited
in the gallery.
Such items include, but are not limited to, one, any
pointed objects, including knives of any kind.
Two, banners, flyers, or other forms of signage.
Three, food and beverages, including in glass or
metal canisters. Four, backpacks, large bags,
and sealed packages. Clear bags, not tinted in color,
that do not exceed 12 inches by six inches by 12
are permitted and subject to search.
And five, firearms, ammunition, fireworks,
laser pointers, stun guns, tasers, mace pepper
spray, and toy weapons. Cell phones and other small
handheld recording devices must be placed in silent mode,
can only be used while seated, and can only be used in a
manner that does not interfere with the ability of other
individuals to view or hear the proceedings.
Individuals or groups failing to adhere to these
rules will be subject to removal from the remainder of the
meeting by the sergeant at arms.
City of Chicago City Council Rules of Conduct for Public
Meetings, 2023 to 2027.
Pursuant to Rule 58 of the Chicago City Council Rules of
Order and Procedure, the sergeant at arms sets forth the
following rules of conduct for members of the public.
These rules shall be in effect at all times that a viewing
gallery or room is open for a meeting of the City Council
or any of its committees. All individuals and their
belongings are subject to search at entry or upon
request. Individuals must remain seated at all
times except, one, when entering or exiting the
gallery. Two, when providing public comment during the
portion of a meeting set aside for that purpose.
Or three, when asked to rise and be acknowledged by a
member of the city council.
Profane, threatening, harassing, abusive,
or defamatory behavior or speech, which in the
judgment of the meeting's chair or the sergeant-at-arms may
lead to a breach of the peace or disrupt the orderly conduct
of the meeting is not permitted. Disruptive or distracting
actions, such as the stomping of feet, waving of arms,
throwing any item, whistling, booing, shouting,
or other loud utterances are not permitted when in the judgment of the
meeting's chair or the sergeant at arms, such actions are
disrupting or impeding the orderly conduct of the meeting.
Any item that poses a potential safety hazards, as determined by the
sergeant at arms, is prohibited in the gallery.
Such items include, but are not limited to, one, any
pointed objects, including knives of any kind.
Two, banners, flyers, or other forms of signage.
Three, food and beverages, including in glass or
metal canisters. Four, backpacks, large bags,
and sealed packages. Clear bags, not tinted in color,
that do not exceed 12 inches by six inches by 12
are permitted and subject to search.
And five, firearms, ammunition, fireworks,
laser pointers, stun guns, tasers, mace pepper
spray, and toy weapons. Cell phones and other small
handheld recording devices must be placed in silent mode,
can only be used while seated, and can only be used in a
manner that does not interfere with the ability of other
individuals to view or hear the proceedings.
Individuals or groups failing to adhere to these
rules will be subject to removal from the remainder of the
meeting by the sergeant at arms.
City of Chicago City Council Rules of Conduct for Public
Meetings, 2023 to 2027.
Pursuant to Rule 58 of the Chicago City Council Rules of
Order and Procedure, the sergeant at arms sets forth the
following rules of conduct for members of the public.
These rules shall be in effect at all times that a viewing
gallery or room is open for a meeting of the city council
or any of its committees. All individuals and their belongings
are subject to search at entry or upon request.
Individuals must remain seated at all times except,
one, when entering or exiting the gallery.
Two, when providing public comment during the portion of a meeting
set aside for that purpose.
Or three, when asked to rise and be acknowledged by a member
of the city council.
Profane, threatening, harassing, abusive,
or defamatory behavior or speech, which in the
judgment of the meeting's chair or the sergeant at arms may
lead to a breach of the peace or disrupt the orderly conduct
of the meeting is not permitted. Disruptive or distracting
actions, such as the stomping of feet, waving of arms,
throwing any item, whistling, booing, shouting,
or other loud utterances are not permitted when in the judgment of the
meeting's chair or the sergeant at arms, such actions are
disrupting or impeding the orderly conduct of the meeting.
Any item that poses a potential safety hazards, as determined by the
sergeant at arms, is prohibited in the gallery.
Such items include, but are not limited to, one, any
pointed objects, including knives of any kind.
Two, banners, flyers, or other forms of signage.
Three, food and beverages, including in glass or
metal canisters. Four, backpacks, large bags,
and sealed packages. Clear bags, not tinted in color,
that do not exceed 12 inches by six inches by 12
are permitted and subject to search.
And five, firearms, ammunition, fireworks,
laser pointers, stun guns, tasers, mace pepper
spray, and toy weapons. Cell phones and other small
handheld recording devices must be placed in silent mode,
can only be used while seated, and can only be used in a
manner that does not interfere with the ability of other
individuals to view or hear the proceedings.
Individuals or groups failing to adhere to these
rules will be subject to removal from the remainder of the
meeting by the sergeant at arms.
City of Chicago City Council Rules of Conduct for Public
Meetings, 2023 to 2027.
Pursuant to Rule 58 of the Chicago City Council Rules of
Order and Procedure, the sergeant at arms sets forth the
following rules of conduct for members of the public.
These rules shall be in effect at all times that a viewing
gallery or room is open for a meeting of the city council
or any of its committees. All individuals and their belongings
are subject to search at entry or upon request.
Individuals must remain seated at all times except,
one, when entering or exiting the gallery.
Two, when providing public comment during the portion of a meeting
set aside for that purpose.
Or three, when asked to rise and be acknowledged by a member
of the city council.
Profane, threatening, harassing, abusive,
or defamatory behavior or speech, which in the
judgment of the meeting's chair or the sergeant at arms may
lead to a breach of the peace or disrupt the orderly conduct
of the meeting
Is not permitted.
Disruptive or distracting actions, such as the stomping of feet,
waving of arms, throwing any item, whistling,
booing, shouting, or other loud utterances are not
permitted when in the judgment of the meeting's chair or the sergeant at
arms, such actions are disrupting or impeding the orderly
conduct of the meeting.
Any item that poses a potential safety hazards as determined by the
sergeant at arms.
Such items include but are not limited to, one, any
pointed objects, including knives of any kind.
Anyone for public comment?
Or other forms of signage.
No public comment? Okay, thank you.
Beverages, including in glass or metal canisters.
Four, backpacks, large bags and sealed packages.
Clear bags, not tinted in color, that do not exceed 12
inches by 7 inches by 12 are permitted and subject to
search. And five, firearms, ammunition,
fireworks, laser pointers, stun guns,
tasers, mace, pepper spray, and toy weapons.
Cell phones and other small handheld recording devices must be
placed in silent mode, can only be used while seated,
and can only be used in a manner that does not interfere
with the ability of other individuals to view or hear the
proceedings. Individuals or groups failing to
adhere to these rules will be subject to removal from the
remainder of the meeting by the sergeant at arms.
City of Chicago City Council Rules of Conduct for Public
Meetings 2023 to 2027.
Pursuant to Rule 58 of the Chicago City Council Rules of
Order and Procedure, the sergeant at arms sets forth the
following rules of conduct for members of the public.
These rules shall be in effect at all times that a viewing
gallery or room is open for a meeting of the City Council
or any of its committees. All individuals and their belongings
are subject to search at entry or upon request.
Individuals must remain seated at all times except,
one, when entering or exiting the gallery.
Two, when providing public comment during the portion of a meeting
set aside for that purpose.
Or three, when asked to rise and be acknowledged by a member
of the City Council.
Profane, threatening, harassing, abusive,
or defamatory behavior or speech which in the
judgment of the meeting's chair or the sergeant at arms may
lead to a breach of the peace or disrupt the orderly conduct
of the meeting is not permitted. Disruptive or distracting
actions, such as the stomping of feet, waving of arms,
throwing any item, whistling, booing, shouting,
or other loud utterances are not permitted when in the judgment of the
meeting's chair or the sergeant at arms, such actions are
disrupting or impeding the orderly conduct of the meeting.
Any item that poses a potential safety hazards, as determined by the
sergeant at arms, is prohibited in the gallery.
Such items include but are not limited to, one, any
pointed objects, including knives of any kind.
Two, banners, flyers, or other forms of signage.
Three, food and beverages, including in glass or
metal canisters. Four, backpacks, large bags,
and sealed packages. Clear bags-
No, we don't.
Good morning.
The Committee on the Budget and Government Operations will come to order.
We will begin with a
roll call to determine quorum,
even though we don't need one. But I will
entertain the law department today.
Vice Chair Lee. Alderman Espada.
Alderman Dial.
Alderman Robinson. Alderman Yancy. Alderman Mitchell. Alderman Harris.
Alderman Beale. Alderman Ramirez. Alderman Quinn.
Alderman Lopez.
Alderman O'Shea.
Alderman Mosley.
Alderman Rodriguez. Alderman Scott. Alderman Cesar Lopez.
Alderman Burnett.
Alderman Taliaferro. Alderman Cardona.
Alderman Rodriguez Sanchez. Alderman Conway.
Alderman Quezada. Alderman Villegas. Alderman Mitch.
Alderman Sposato. Alderman Nugent.
Alderman Vasquez.
Where is Vasquez?
Yeah. Cause of all of this. Alderman Napolitano.
Alderman Riley.
Alderman Knutson.
Alderman Hatton. Alderman Silverstein.
We have 15 members, myself makes 15.
We do have a quorum.
The following have requested participation remotely
under Rule 59, which are Vice Chair Lee, Alderman
Moore, Alderman Taylor, Alderman Rodriguez, Alderman Rodriguez Sanchez, and
Alderman Quezada.
I make a motion to allow that. So moved Alderman Villegas.
All in favor signify by saying aye. Any opposed?
Any opinion to-
All the-- Yeah, all right. Thank you.
Okay. You're entering Nick in, okay.
Any opinion to chairs, the ayes have it, and those aforementioned
will be permitted via Rule 59. I see that we
have Alderman Moore and-
Present
... Alderman Quezada on right now.
Hi, Mr. Chair. Present.
All right. Cool.
Public comment. I didn't get any slips.
Do we have any others that wish to make public comment at this time?
Okay. With that being said, public comment
is here and
gone.
All right.
With us today, we have our mid-year hearings.
We are going to
conduct in a fairly free-flowing manner.
I think after presentations, we'll put
seven
minutes on the clock for everyone. Can you do seven? Seven? Okay.
We'll put seven minutes on the clock for questions,
and then we'll go back to a round two if need be, if you have additional questions.
Alderman Quinn? I
was saying, I'm messing. Two sitting next to each other. I already messed that up.
Go ahead.
Is the budget director joining us today?
It was my anticipation. I've not been
informed otherwise.
Let me check. I didn't realize she wasn't here.
Emily?
And
the committee will stand at ease for about five minutes.
We want to give her an opportunity.
She's dealing with a personal
matter.
With no space for me.
Okay. We are...
Can you come up?
Oh.
Okay, we're back on. We want to recognize,
I see we have Alderman Martin.
Who else did I see?
Alderman Vasquez,
who we were going to put out a warrant for.
Alderman Cesar Lopez.
Alderman Talia Ferro.
Yeah.
Talia Ferro.
Non-member Cruz.
Did I miss anyone?
Okay.
All right. We
good? Okay.
All right. We will begin today's hearing
with a presentation. We have with us our
budget director,
Annette Guzman, acting CFO
Steven Marr,
and our comptroller, Mike Belsky.
Those in the box, could you introduce yourselves as well?
Hi, everyone. Brian Carlson, deputy director of the Tax Administration and
Finance.
Good morning, everyone. David Holekamp, deputy corporation counsel for the
Collections, Ownership, and Administrative Litigation division in the law
department.
Chip Hastings, deputy director of Financial Policy in the office of the
CFO.
Okay. Thank you, all. With that, we'll begin with
our director. Director Guzman, you may proceed.
Good morning, Chairman Irvin, Vice Chair Lee, and members of the committee.
I'm Annette Guzman, budget director for the City of Chicago.
On behalf of the Office of Budget and Management, thank you for the opportunity to
present the 2026 mid-year budget report, submitted pursuant to Section
24055 of the Municipal Code.
This report reflects the city's fiscal position through May 31st, 2026.
Today's presentation will walk you through four areas, a quick snapshot of where we
stand at mid-year,
including our mid-year revenue performance and operational discipline on the
expenditure side, and finally, critical considerations as we look to the
end of the current fiscal year and towards the 2027 budget
process.
The full written report has been transmitted to the committee and is available for
reference on OBM's website.
I'm joined today by Steven Marr, acting chief financial officer, and
Michael Belsky, the city's comptroller.
Between OBM, the CFO's office, and the comptroller's office, we're able to
speak to the full picture, budget to actual performance, cash and debt
management, and the financial reporting and controls.
We'll each be available for questions following the presentation.
As noted before, our presentation today covers four key areas.
First, where we stand at mid-year overall,
taking a second closer look at mid-year revenue performance,
including categories that are outperforming budget and those that are
not. Third, the operational discipline that the city has maintained on the
expenditure side, including overtime controls and workforce management.
And fourth, critical considerations the committee should be aware of as OBM
and departments begin developing the 2027 executive budget
recommendation.
At the end, we'll close for an opportunity for questions.
The city began, as you all remember, the 2026 budget development phase
last year facing a projected $1.2 billion structural gap
between revenues and expenditures.
That structural imbalance, as we all know, persists today.
And I'll walk through the mid-year detail on both sides of our ledger.
On the positive side, two of the revenue reforms that were implemented
and passed by City Council
are over-performing first-year projections.
Online sports wagering tax collections are running 68.7% ahead of
target, and social media tax collections are running
25.1% ahead of budget.
These are two entirely new revenue sources introduced this year, and
both are exceeding expectations.
On the expenditure side, cost controls are holding.
No department has exceeded its overtime appropriation through the midpoint of this
year, and departments are managing within their budgets
overall. Our efficiency initiatives spanning fleet,
procurement, benefits, real estate, and organizational
optimization are tracking at or
ahead of target on most work streams, with measurable
acceleration in June.
Each of these items are detailed in reports sent to City Council on a monthly
basis on the revenue side, as well as the efficiencies.
As indicated here, our local tax categories are performing above
their year-to-date budgeted targets through mid-year. And this is important.
We always say that what we control, we do very well
in forecasting.
Transaction taxes, largely driven by the personal property lease tax, are running
10.5% ahead of budget at mid-year,
with $466.7 million
collected against $422.5 budgeted.
The personal property lease tax rate increase from 11% to 15%
effective this year is a primary driver of that performance, along with
continued growth in the cloud computing portion of that tax base.
Specifically, personal property lease tax is 11.15%
ahead of budget.
Utility taxes are running 6.8% ahead, recreation
taxes 7.3% ahead, and the state income tax distributions
to the city are 7.1% ahead, largely
based on the growth in personnel wages.
All of which reflects a stronger than expected growth in
statewide labor income.
These are core, broad-based local tax categories, and their
outperformance reflects underlying economic activity and the rate
adjustments incorporated into the enacted budget rather than one time or
discretionary revenue assumption.
We've isolated six revenue lines that are underperforming their year-to-date
budgeted targets, and it's worth being precise about what these have in common.
As the footnote on this slide states, they are operationally complex revenue
lines, and in the case of the debt sale, they reflect non-recurring revenue
assumptions built into the enacted budget, not shortfalls in the
underlying economy or in the local tax performance.
Specifically, the sale of debt was budgeted $89.6 million year to
date, but hasn't generated or achieved its target.
The same is said of advertising revenue, which was budgeted at
$6.5 million, and augmented reality, which was
budgeted at $6
million. Video gaming licenses revenue
is budgeted at 6.8, but is yet to have
established long-term administrative operations,
thus, no collections have been generated to date.
The liquor tax is running 37.6% below its year-to-date target,
which reflects a structural rate design change enacted this year, which
I'll explain.
And finally, the checkout bag tax is running 10% below target, which is
attributable to consumer behavior response to the rate increase from
10 cents to 15 cents.
On the liquor tax specifically, the 2026 budget shifted the off-premise liquor
tax from a unit-based volume basis to a 1.5
percentage of price basis. That change, as
structured, lowered the effective tax rate compared to what was in place before
2026.
We do anticipate, however, that collection should improve in the second half of the
year for liquor tax as the retailers exhaust the existing inventory that was
already taxed under the old per gallon regime.
Taken together, these six lines accounted for a meaningful share of the
year-to-date revenue variance, and each reflects either an operational
implementation challenge, such as standing up a new administrative program
or a rate design that was enacted with an outcome built in.
This is distinct from broad-based tax
underperformance,
which, as shown in the prior slide, is not what we're seeing currently.
Turning to the expenditure side.
Overtime spending is currently at $146 million against a
$421.6 annual budget,
which means that 34.7% has been utilized at the midpoint
of this year. No department has exceeded its overtime appropriation.
In fact, although citywide overtime spending is
modestly up year over year
across
all funds
We are seeing departments control their expenditures in a disciplined
way.
Notably, the Chicago Police Department, historically the largest driver of overtime
costs, is actually down $1.2 million year over year in overtime
spending as of May 2026, despite higher
compensation rates. However, we are monitoring all
departmental overtime spending closely as we enter
the height of the summer event season, a time of year which has traditionally
seen some of our highest overtime usage.
On workforce, the citywide vacancy rate stands at 13.9% as
of late May, an improvement from just over 15% at this point
last year.
Net personnel is up 56 positions year to date, with hiring and attrition both
being managed effectively.
This combination, controlled overtime and improving vacancy
rates, reflects sustained departmental discipline on the cost side of the ledger,
even as our revenue side faces the pressures we just discussed.
The 2026 budget included a series of targeted efficiency initiatives
across fleet, procurement, benefits, real estate, organizational
optimization, and special events cost recovery, all designed to generate
sustained savings as well as revenue, independent
of the underlying local tax performance on
our revenue side.
As of May, several are ahead of target.
Benefit savings are at 143% of the target that was set
for the savings goal in the 2026 budget, having generated
$2.86 million against a $2 million goal.
Organizational optimization is running ahead of target across all funds, with
the corporate fund at 53% ahead of the 50% target that
was achieved by mid-year.
Other initiatives are earlier in their ramp-up.
Fleet savings are 65% of target, with a 13 month over month
increase. Procurement is at 22% of its $10 million target, but has
shown a substantial increase month over month, with anticipated ramp-up
throughout the end of the year.
Land sales are 22% of the target of $14 million.
Special events cost recovery is at approximately 5% of its target, and
this initiative is one that is tied to a new labor tracking
system that only went live in May. So we expect that
this
cost recovery will accelerate in the second half of the year, especially as
billing for large events picks up.
Real estate savings remain pending as the roadmap for consolidation is being
finalized.
Overall, this picture on efficiency initiatives is a positive momentum, with
several workstreams already exceeding their annual targets at the midpoint of this
year.
With that, I'm going to turn it to Comptroller Belsky, who will talk about the end
of year result.
Thank you,
Director Guzman. Thank you,
Chairman and members of the council.
This slide just is a snapshot.
Remember, the ACT for is a backwards looking document.
This is the results for 2025. We're in
2026.
We're required to do this within 180 days
of the close of the year, and we've met that.
This year,
in the general fund on a budgetary or cash basis, we saw a
$219 million increase. That's
the highest increase in 10 years,
notwithstanding the COVID
years.
So that's a 7.5% growth, and then we had
expenses were kept to 0.6%,
which is much lower than the rate of inflation.
I believe that was 1.7.
And then we also wanted to show the city as an entire enterprise, not
just the general fund, so we looked at all of the
enterprise funds, and so the net position on those
increased by $573 million.
I'll now turn it over to Stephen Marr, our CFO, to
discuss the pension fund positions as well, because
they are part of the whole enterprise.
Thank you, Mike. Good morning, everybody.
As you can see on this slide, each of the four pension funds' funded
ratio increased over the course of
2025. What you cannot see on this slide
is how the funded ratio increased in aggregate across the four
funds. In aggregate across the four funds, our funded ratio
is now 28.1% on a fair value basis.
That's up 2.5 percentage points from the end of
FY 24 when it was 25.6.
Thanks, Mike.
Thank you.
Guzman.
And so turning back to the 2026 outlook,
I want to stress that this is preliminary.
We will be providing the full end of year 2026
outlook in the 27 budget forecast, which is published in August, and that's
important because we'll have more months of
data, especially given that
most of our revenue comes in during the summertime.
But based on current trends, OBM is projecting
$122.8
million negative variance against budget and revenue,
partially offset by a projected $33.5 million positive
expenditure variance for a net projected corporate fund gap of
approximately $89.3 million by the end of this
year.
As I mentioned earlier, final year projections will be published in the 2027 budget
forecast.
That will be out later this summer.
On the revenue side, the projected shortfall is driven by two categories.
First, a decline in intergovernmental revenue of $28.9
million. This reflects factors largely outside of the city's
control, including the state's PPRT reconciliation process
While we anticipate things slightly up in PPRT by the end of this year,
personal income tax collections--
I'm sorry, we anticipate things slightly up in PPRT and personal income tax
collections this year. The impact of lower corporate income tax due to the
impact of federal tax reductions is
anticipated to drive our intragovernmental revenue collections lower than budget
this year.
Second and larger is the underperformance of local non-tax revenue at
$148.9 million. This category includes the
operationally complex and non-recurring revenue lines we reviewed earlier,
the debt sale, the advertising revenue, augmented reality, and related
items.
On the expenditure side, we're currently projecting a positive variance, a savings
of $33.5 million, driven by
$54.4 million in contractual savings and $50 million in
personnel services savings, each net of other pressures
within those categories.
In summary, the financial headwinds reflected in this preliminary outlook are
substantial, and they call for a disciplined approach
to ensure that we end the year in balance.
And as we move into the 2027 budget development, my team and
departments will be focused on identifying structural solutions,
not one-time fixes, to close the gap and the underlying structural imbalance that
continues to persist. With that, I'll turn it back to you, Chairman, for questions.
Thank you,
Director. Before we move forward, we got a couple of folks who joined
us. I want to recognize Alderman Robinson, for the record,
Alderman Mitchell, Alderman Beale, Alderman Cardona, and Alderman
Hatton. Did I miss anyone?
Okay.
Vice Chair Lee is on.
Alderman Rodriguez Sanchez is here.
Okay, Vice Chair Lee, we have you. Alderman
Rodriguez Sanchez, we have you as well,
attending virtually. So, okay?
All right.
Also, you all have some appendices in
as part of the presentation as well.
Could you all go through those as well?
Because I think some,
we're going to end up dealing with them anyway, so we may as well at least put the
information out so-
Sure
... walk through some of that.
I'll turn it over to Steven Maher, the acting CFO.
Yeah. Thank you, Annette. Thank you, Chair Evren.
So the appendix is really focused
on the universe of items that the city is
evaluating in conjunction with the debt sale that Annette talked about.
So slide 13,
capturing four different buckets of outstanding debt that
the city has. Administrative hearings on the far left-hand side,
vehicle debt, EMS debt, as well as a small sliver of cost
recovery debt on the far right-hand side.
And I anticipate we'll have some questions about the debt sale,
which has been focused on vehicle debt over the past several months.
Slide 14 gives a short description of cost recovery
debt. We talked back in February, March, and April about these
different buckets and which may be viable or not viable in a debt sale.
Through a number of internal conversations, we decided that cost recovery
debt was challenging for various reasons, particularly because it
lacked uniformity.
Slide 15 talks a little bit about administrative hearings
debt.
This is a slide that some folks may have seen previously.
Again,
similarly, some challenges with the sale of
administrative hearings debt,
particularly the challenge with selling that debt and then the
potential for a
buyer
to then not redevelop or repurpose that property as the city might
expect.
Slide 16, an overview of
enforcement strategy.
Maybe I'll pause here, and Mike, if you want to cover
16 and some of the pieces
here, that would be helpful.
Yeah. So
we also have with us David Holtkamp, who heads
the unit in the Department of Law. But the
administrative hearing debt, typically things like property code
violations,
one
remedy or one path is to file liens
on those properties. And what
our
legal department's been able to do is, you see here, a 22%
increase in enforcement. A lot of this input often comes from
the city council with unkempt properties that can be
attractive nuisances in your neighborhoods.
If we were to sell off that sort of debt, we lose that power to
correct it.
And correcting it can mean just making it safer or clearing the lot, making
it available for economic development.
And so this speaks to the fact that, as we
considered what sort of debt to sell,
we thought that this should really be off the table because the
enforcement mechanism has been effective in terms of
increasing the collection of this debt and also getting
properties into compliance. David, I don't know if you want to add to that?
Sure. So
back in 2024, the corporation counsel's office created the Special Collections Unit
to focus on these kinds of debts and these kind of landowners, and
we've really had a lot of success on that.
And these are kind of the properties and the kind of debt you would be looking at
selling here is weed violations, dumping, all of those things,
all the vacant lots in the city.
Almost all the vacant lots in the city would have debt on them, and if you sold
this or if we transferred this type of debt, we would lose the
ability to, or possibly lose the ability to
enforce
our
laws against these individuals, and certainly lose the ability to
go after, say, our top 10 individuals.
We've been very successful in enforcing our laws
against
certain individuals, our top 10 that own huge amounts of
property across the
south and west sides. 800 lots with one individual, hundreds of lots and
other individuals. So if we
lost control of that debt and those liens, then we would lose the ability
to
bring accountability to those individuals and force them to
bring those lots into compliance, and even force them to transfer
those lots or transfer them to individuals that
would otherwise
maintain them or develop them. We would lose
the control to do that.
Thank you, David. On slide 17-
Oh, point of information, Chairman Dial.
Yes. Are you able to say how many bad
actors there are total in the pool?
You mentioned something about the top 10.
And how much do the top 10 owe
the city?
I don't have the exact number or amount that the top 10 owe the city,
but it's in the over $10 million
range, 10 to $15 million.
Over 10 million as in an aggregate number?
As an aggregate number.
All right. Do you have a number for how many-
Chairman.
Hmm?
You actually number two. You can-
That was part of my first question.
He didn't answer it, so I'm repeating the question.
You asked for a point of information.
That is a point of information.
Well, you sound like you're going into questions, but let him finish, and then,
Chairman, Harris will be first, and then you can follow with your questions
after that.
No, I want to follow Alderman Harris.
I would like an answer to my question, and then when I have questions, I'll
raise my hand.
Well, you're asking a question, so I'm going to ask that
you, during your time for questions, you can have the questions.
That's all I'm saying.
I just had a point of clarification information. Thank you, Mr. Chairman.
No problem.
Thanks again, David. So slide 17,
bottom right-hand corner, you can see here in green that we've identified this as a
potential debt that could be sold.
But one thing to flag over on the left-hand side of the slide is that more than 75%
of vehicle debt collections are successfully recovered within the first three
years.
Slides 18,
19, 20, and 21 all flag for
city council collection trends over the past several years.
So slide 18 demonstrates a modest increase in the
collection trends for cost recovery.
Slide 19 tells a similar story for administrative
hearings.
Slide 20 identifies overdue vehicle debt collections.
And then slide 21
captures a
sort of summary of the prior slides.
You can see in the top left-hand corner, we've got more than 1.1 billion
in cash basis collections increase from 2019 to
2025, a 33% increase overall. And
then as David alluded to, and we've discussed before,
additional DOL collection efforts have ramped up over the
prior years.
And then slide 22 is just a quick snapshot of our wage
garnishment rules and equity protections.
Chair Urban, that's the brief summary of the appendix to this
mid-year hearing presentation.
Thank you.
Thank you,
team here.
We're going to start with questions.
Madam, would you allow Chairman Dial to proceed on the questions first?
Chairman, go ahead.
I'd like just an answer to the point of clarification I asked.
Do we know
how many... You said you don't know how many
violators there are in this group.
Or do you?
In the top 10 group?
I don't know. Can I get a list of the top 10 through the chair-
Yeah
... about that?
Yes, we can provide that.
All right. And then what's the total number of--
what's the total pool
for violators?
For individuals in Department of
Administrative Hearings debt?
Yes.
That are part of this
judgments, DOAH
enforcement and accountability section, page 16.
You talked about the top 10 violators.
You told me that the top 10 violators
in the aggregate owe the city about $10 million.
And my question to you was, how many are in the
total pool that-- how many violators are there in the total pool?
First, I
wanted to clarify. It's well over $10 million for the top 10 that
owe on these.
And the total pool, so the top 10 violators are
what we are concentrating on initially, but we are also concentrating
on
This group as a whole, and there are
hundreds if not thousands of individuals and companies that participate
in tax sales and own lots across the city,
that the special collections unit is focusing on
to make sure they are held accountable and to make sure
that their lots are mowed, their lots are not nuisances.
So the top 10 are what we are,
the big ticket items, as you might say.
But we are focusing on all of these violators.
We are doing things across the board, and the number would
be large.
I'm assuming the number is large. I'm trying to get a specific number.
Am I able to get that through the chair, yes or no?
I
think we could pull the specific number of
individuals or corporations, respondents that
owe Department of Streets and Sanitation tickets
for
vacant lot violations.
All right. I'll take that.
We'll be here a while. So, if you can have somebody pull that while we're
here, that would be helpful.
And I'll look for the top 10
rollout at another time through the chair.
That was my question. I'll come back around for a round two.
You want a round two? Okay. All right. I guess we'll be here a while. Okay.
Next, I'm going to try to let people know ahead of time.
So we'll have Chairman Harris, followed
by
Alder Riley. And do you want me to come back to you
now, or you want to wait a little while?
Okay.
You don't have a switch or anything? A bell? Okay.
Chairman, just for clarification, are you going in seniority order, or the people
that's there first and then online? Or how you doing it?
I'm going to afford the people that are here a little more latitude.
So, Mr.
Alder Moore, we'll get to you. I'm looking at a mix of both of them.
No, I respect that. I believe in that. If people show up, they should go first.
I believe in that.
Okay.
I'll text you to let you know when you're up.
So we're going to start with Chair Harris, followed by
Alderman Riley, and then after that, we will go
to Alderman Quinn.
Good morning, Mr. Chairman. Thanks.
Good morning. I'm all
over the place today. Good morning, everybody.
Good morning.
Given the fact that the property taxes are
so behind,
how is that affecting us as a city? Will it cost us
money? Will we have to get a line of credit to keep up?
Because we're looking for an influx of money by a certain date.
So could you walk me through that?
Yeah. I'll start, and maybe Steven, you can add on because
it really affects our pension funds more than it does us.
So, the city has a really positive cash
position, which we use throughout for a number of
reasons. Not only for
payments to the pension fund, but also for other things like our
capital
infrastructure projects and so forth.
The delay in the property taxes has less of an impact to us because our property
taxes largely go towards paying our debt and our pension
funds. And so for the
delay, what it's really going to impact is our pension fund.
So for the last four years, this may be the fifth year that Cook County is late.
I can't remember off the top of my head.
What the city has done is we have advanced dollars to the
pension fund in the amount of their property tax
distributions on a monthly basis based on a
schedule that the pension funds give to us.
And the schedule is really based on when the pension funds believe they
need cash in order to make benefit payments, so they do not
have to liquidate their investment assets, which
would
essentially pull dollars out of the very investment
instruments that are accruing investment returns, which helps
their funded ratios go up. So for us, the delay is less of an
issue on our cash balance in our
cash books, but more about helping the pension funds
stay afloat while the property taxes are delayed.
It does cost us, which is the other side of the ledge.
And I know that Alderman Riley has brought this up before.
Over the last several years, by pulling dollars out of our own investments,
which means that we're not accruing those dollars and getting
investment returns. The treasurer's office has told us, I believe it's about
$18 million since 2022, that we have
lost value in by not having our
money be able to just stay in our own investments.
So are we making our full pension payment?
We've always made our statutory pension payments.
Not the statutory, the additional payment.
Are we going to make an additional payment?
I'll let Steven talk about that.
Yeah. Thank you, Ned, and thank you, Alder, for the question.
I mentioned earlier that the four funds, their pension funded ratio
increased over the course of 2025.
Three reasons for that. One primary reason is that they were able to
achieve high returns in a good market
One of the reasons they were able to achieve high returns in a good market is, to
Annette's point, is that they did not have to liquidate any funds, and they
didn't have to liquidate any funds because the city provided that liquidity as
property taxes were delayed. So this year,
Cook County has indicated a few weeks ago that property taxes are likely to be
delayed by about two months.
We are working on an analysis now
to understand how much we might have to support the poor pension funds so that they
don't have to liquidate funds in 2026, because we want them to continue to
achieve strong returns and to increase their funded ratio.
We talked back in February
about us splitting up the advanced pension payment this year.
We made half of the
supplemental pension payment in January, around
$129 million,
with the expectation at that time that we would make the second
half of the payment in the late second quarter or early third quarter.
We are now, of course, in the early third quarter.
And now that we have this news about Cook County property tax delays coming
again this year, we are continuing the
analysis to see when and in what amount we
will make the second installment of the supplemental pension payment.
All right. I'm going to leave that one alone. I want to go to Streets and San.
Is this a point of information or a question?
CFO's statement that he would make a
determination whether or not to make the full payment or a partial payment in the
second half. Was that accurate?
Go ahead.
We're working through an analysis now to determine the timing and the amount.
Right. Despite the budget that passed that had that in there,
he's going to make a decision. I just want to make sure that the executive branch
is making that decision, correct?
The executive branch is tasked with executing the budget. That's correct.
Chair.
Okay. So
streets and sands are the bread and butter of the City of Chicago.
And for a person who came from that department, and
as I particularly look at what's happening in my very own
community that I represent, and I see that
we're working later on a Friday to get garbage picked up
because we don't have drivers or equipment.
So talk me through,
as you spoke about it earlier in here, that we're not doing
overtime. Everybody's meeting their overtime quota.
But as a city, if we don't have enough truck drivers, we don't have enough
laborers
to take care of the City of Chicago, how we move forward
for the rest of the year in a shortage.
So
can somebody speak to that?
I would like to speak to it. I just want to make sure I understand the question.
Is the question about are they having difficulty recruiting drivers?
No.
What's the question?
The question is, are we allowing them to hire-
Yes
... drivers and laborers? Because
in the community I represent, the last thing I want is my
community not to be able to be serviced because through no fault
of the community's own, we are the last people on the list to
be taken care of at the end of the week.
For people that don't know, there is a history on Monday and Fridays for
people to take off, and we've been in emergency
tree removal through the storms in certain communities.
My community was particularly hard hit.
So I'm super concerned about the fact that
the current folks are maxed out.
One, maxed out, and that we can't continue to force
people to work long hours, and I think it's directly related
to the fact that there's not enough trucks and enough bodies on the street.
So, through the Chair, I want to know
how many trucks Streets and Sands is short, and how many laborers they're
short.
So through the Chair.
And I can answer those questions right now.
Okay.
They're at full staff for laborers, and we have not held back any A forms for
drivers.
We can get the number
through the Chair. So you could give me the full staffing number for the trucks and
the laborers through the Chair.
And you're speaking Streets and Sands?
Streets and Sands. Yeah.
Okay.
Mm-hmm.
If you give me a second, I can get that number for you. Yeah.
It's bad.
Then we looked at fleets and the savings in fleet, but
as I drive through my community with garbage trucks,
some of the oldest trucks are out on the street.
So I want to know what fleet's doing to help keep
the newer vehicles out on the street.
If trucks are down and we're using old
equipment,
it just isn't as efficient as some of the newer pieces.
So if we're having problems with some of our newer trucks,
I'm concerned again about the aging of the fleet,
and fleet being able to keep up with the
service and the maintaining of these newer vehicles, and that I got to
have old trucks that leak all through our community and
create another issue for me.
This is a great question. So the fleet initiative is really focused on exactly
what you're talking about, which is getting the repair and maintenance
optimization and transformation so that we are
repairing and keeping our fleet and all of our equipment up to
speed.
One of the things that we're working with 2FM, as well as DPS
on, is updating our
standard operating procedures, as well as the throughput
of the vehicles that come in, making sure that departments are actually
sending their fleet that need to be serviced
to FM in a timely manner, so that we're
shifting from reactive maintenance to actually proactive maintenance on all of our
fleet.
Okay.
Again,
I'm a kid. I'm a former ward superintendent, so I am not afraid to be
behind a stinky truck and an old truck in my community.
And I'm just saying,
while you may be able to tell me that fleet is
keeping up, I'm just telling you for the amount of old trucks that are-
I'm not saying that they're keeping up right now.
I'm saying that this is a whole scale shift to how they operate, going from
reactive maintenance to proactive maintenance that is
reflective of updating standard operating procedures.
It's also
reflective of how they actually do their operations in total,
and that's what the shift is that they're working on right now.
Could you
as part of that conversation,
provide or talk through the
capital budget? Because part of the previous challenge was we
didn't allocate the capital budget to keep up with the
replacing the trucks on a
moderate basis, right? And so we just kept fix, fix, fix, fix, fix.
But in the long term, fix, fix, fix, fix, fix cost us more money than just
actually buying a new truck in some instances. So.
I think it's all integrated. I think what you'll
find is if you actually
are proactive in how you repair your fleet, they
actually are able to
run longer and have a much longer useful life.
What we are seeing and what we have seen for years and decades is that
our repair and maintenance has been on a more reactive side,
which is you wait for them to break down.
You're not keeping them up to speed and up to date like we see some other
organizations do. So we run our equipment into the
ground, which makes it that much more difficult to actually fix them
in the long run. So shifting to proactive maintenance will actually help us develop
a much better capital plan and replacement cycle, which is all part of
the initiative that Fleet is working on.
And what do we project the long-term savings of
operating this way to be going forward?
Yeah. We're working on developing that metric for
you, for the mayor, and we'll hopefully have that within the next several months
to show if as moving in this direction.
Technically, I should say the report that we released last year tells you
what moving in this direction could save us.
We want to get you actual projections based on
implementing the changes
and actually working and complying with our SOPs
that are being built right now, what that will actually save us in the long term.
But it's a building block that's going to take us a little bit of time to
develop.
Very well.
And on that point, through the Chair, I want to know the age of
every truck, garbage truck, in Streets and
San and how many are up and operational.
Okay.
All right?
Yeah. Okay. Very well.
I got one last question, then I'm going to sit down and be quiet.
Just one-
All right. That's cool then. You-
I'm a
quiet kid. I don't be on the mic that much.
Go ahead.
Thank you.
As we talk about the amount of bad debt that we have,
who's charged with the implementation of, say, the
sale of debt,
augmented reality, and a video game? Who's charged?
Because if we say we're getting
zero, who's supposed to make sure that we
got a process set up so that we get money?
So the sale of debt, as reflected in the management
ordinance that City Council passed,
is the responsibility of the Comptroller.
The augmented reality and the advertising revenue
initiatives are the responsibility of the CFO's office
for the management ordinance.
And there are memos too, I think, to both of those items that were
submitted
in the packet for today. So
are you good?
I'm good.
All right.
I just wanted to answer one of the questions that you asked to hopefully maybe
avoid it through the Chair.
Mm-hmm.
Laborer titles in Streets and San, there's 183 filled and
33 vacant at the moment. Not-
Wait, wait, wait
... so they're 96% filled.
Let me go back because I got to go back to my notes. So you said laborers.
803 are filled,
33 vacancies, so they're 96% filled in their laborer
title.
Okay. And drivers?
Drivers, 689 filled positions,
86 vacant.
So 89% filled.
So that would lead to why we got a shortage
come Friday when it's time for me to get my garbage picked up.
I think that they're
constantly recruiting and hiring drivers as well as
laborers.
Okay.
Well, Fridays are-
Fridays suck for garbage picking.
Hey, hey.
If we fill the 86 vacancies, then I feel that I get-
It's still going to be on Friday and it's not going to solve your problem.
But I'm going to go to Alderman-
It'll definitely help me
... it'll help.
Definitely help me.
Full staffing does help of course, but we got to get to
Alderman Riley, followed by
Alderman Quinn, followed by Alderman O'Shea.
Thank you, Chairman, and good morning to the panel.
Budget Director, the good news is I only have one question for you
today, and the rest are for your colleagues.
Who is
responsible for enacting legislation passed by the City Council?
Who is responsible for enacting it?
And implementing the policies dictated by it.
So the departments are responsible for
carrying out the budget as passed.
Very good.
And I think Chairman
Harris I think did a good job setting up my next set of questions, and
unfortunately it looks like this first set are for you, Comptroller Belsky.
And I want to clearly state for the record that I consider myself a fan of
yours, Comptroller, however, I have to ask these questions regarding the debt sale
collapse.
Can
we bring up page six of their-
Hold on. She's bringing the-
Presentation
... thing down.
That shows the revenue, the emerging budget gap.
Right. Thank you.
On the slide, the full 89.6 million
budgeted for collection
was budgeted to be collected by now, even though it's part of the year to date
budget projection, and it's also the entirety of the year's revenue plan.
B of A was announced on June 30th,
and by July 10th, the partnership fell apart.
Could you walk us through the 10 days between announcing Bank of America
on June 30th,
and the memo saying the deal collapsed?
I think more specifically, we're interested in understanding what changed,
and who terminated this
relationship. Was it the bank or was it the city?
So the
controller was tasked with selling the debt.
The CFO is involved in
facilitating transactions.
Oh, okay. Then Comptroller-
We're working hand in hand with this, so I'd like to have Steven address it.
Yeah, please.
But I'd be certainly happy to-
Please
... have it.
Acting CFO Maher, that would be great.
Okay.
Yeah.
I've got short-
Thank you
Quick answers, please.
Thank you for your question, Alder Riley.
In the memo, we outlined a timeline for the first half of 2026.
We had our first meeting with Bank of America on June 11th, after an internal
working group decided that they were the highest ranking respondent of the two
responses that we got
out of
an RFP that was sent to more than 20 firms-
Mm-hmm
... and downloaded more than 50 times over our investor relations website.
Uh-huh.
Bank of America and the city could not come to terms on a scope of
services.
Okay.
Bank of America, as well as the other respondent, as well as firms
that did not respond, indicated a few things.
Number one, that the likelihood of a sale or the success of a sale
was likely low due to a lack of investor interest.
Number two, firms were concerned around reputational
risk, that this was a transaction that they thought was a low probability to
succeed.
And the third piece is
they understood
that this was going to be a process that takes a long amount of time,
that achieving the sale this year was unlikely.
And so for those reasons, including some operational considerations that we
discussed previously, Bank of America elected not to move forward.
Do you think it might have had anything at all to do with the fact that the mayor
called this revenue predatory and immoral,
in his executive order removed EMS debt from the sellable pool?
Could that have had anything to do with interest in doing business with the
city?
Alder Riley, I appreciate the question. I don't think so.
Of those two responses that we got, those
firms indicated interest at that time.
Did B of A or any prospective buyer
cite the executive order or
the political environment being reported in the media as far as the mayor's
disposition on debt sales?
No, not to the best of my knowledge.
Not in their RFP response or in their conversations with the city's team.
And so obviously, as a fiscal steward
for the city,
given what you're telling us here today, is there a successor plan?
A placement agent, another one, a direct portfolio sale,
a securitization, an in-house collection enhancement.
How are you tacking to help us
right the ship on this then?
So we have been in conversations with the other RFP respondent.
Those conversations are ongoing.
We're also thinking through what it would mean to
really develop an alternative
plan. Up to this point,
a reissuance of the RFP is likely not
going to be successful. And just to provide this group some context, we did a
bond underwriting under RFQ last year.
We received between 40 to 50 respondents.
We've got 32 firms in our pool. We thought it was indicative
or really informative that only two firms responded to
this RFP. So we are in the works with developing
a backup plan,
but also trying to identify what other revenue sources might fill the gap in the
event that a sale of debt is just not feasible.
Sure. Well, what's I guess a little frustrating is that if the administration
believed that this revenue was immoral and unlikely to close,
why weren't we presented with viable
options
rather than waiting six months to then scramble to
find a new plan?
I wouldn't describe
what we've done as scrambling. I would describe the past six months as
particularly prudent, particularly thoughtful and
And really a reflection of what we told city council back in December, which
was the sale of debt was likely to not be feasible then.
We have found over the past six months that our intuitions were
largely correct. However, as I mentioned earlier, we are tasked with executing the
budget, which is why we issued an RFP
or talking to-
Well, you may need to look at what bundle of debts you're looking for.
I have 20 seconds, Chairman, so I'll just need to cut you off.
I apologize for being rude.
But you also manage the advertising line item here,
and there is a disturbing trend on this chart.
It's those revenue sources that the mayor
singled out as ones he doesn't like,
inexplicably are all at $0
thus far.
And advertising revenue is at $0,
and that's certainly very different than the mayor sandbagging our
ability to sell debt by taking out the most valuable
pieces.
We have low-hanging fruit that the Department of Transportation and Street
Sanitation could go and do, utilizing public infrastructure for
advertising without having to go contract anyone.
Yet here we are at $0 in July.
And I guess
sale of debt we can quibble and we can argue and we can have our hypotheticals,
but these others are absolutely
actionable and within our control, and it's entirely determined by
the bureaucracy whether or not they're implemented.
And to see these at zeros,
it does seem like an awful big coincidence that those
happen to be the revenue streams that the mayor vehemently opposed during his
budget. And as those folks here who passed a budget, our
expectation is that a good faith and hard effort is
made to implement it, which is why I asked the budget director who's in charge of
implementation.
And so this is frustrating, not just to me, but many of my colleagues to see
that zero progress was made on four different revenue streams.
It would be one thing if just one of these buckets wasn't
panning out as hoped, but literally all four of them.
And so
that needs to be accounted for, I think.
I hear your frustration, Alderman. I think that we're equally frustrated.
I wouldn't say that
outside of the sale of debt,
advertising or augmented reality are things that the mayor's vehemently opposed to.
I think what he has expressed is that the likelihood
of reaching the assumptions that were baked into them were low, which is
what we brought to you at the end of last year.
I also want to highlight that we are working
enormously hard to enact the budget that was passed by City Council, and
there are a ton of public servants who are doing exactly what you've asked them to
do. The sale of debt, advertising revenue,
augmented reality are three initiatives that the CFO's
office is doing at the exact same time with the same
amount of staff that they have. They didn't get additional staff to do this.
So I don't think it's correct to say that we aren't working hard to enact.
We are.
But there is a reality that through mid-year, we have to report on what we've
been able to bring in. And thus far this year, we haven't been able to
achieve the targets that were set in the budget.
And that I appreciate you saying that.
And just one other thing I would like to add on advertising revenue.
This one is
especially complex in the sense that it requires multiple
city department input, and we're going through the process right now
with DPS and procurement to issue a formal RFP on
the advertising revenue component.
So it's been very methodical, but it's had to
have been methodical
so that we sort of developed a program that is in the best
interests of this council and the city.
And I completely understand that, but I guess-- And look, I understand
that everyone has resource issues and manpower issues.
But
the concern here is that it's taken six months for procurement to come up with
a process knowing that
we're in a budget crisis.
Why take so long? It just seems that these things would have been put on the
fast track knowing that we're rushing to get money in the door
each of these different ways,
and advertising seems like one that's credibly actionable and could be done
rather quickly as someone who used to be in advertising.
To the question that has been raised, what do you
anticipate the number coming in at
if it's not the 29 three?
It all depends on the timeline of the RFP process,
and that there's three different types of
sub-projects within the advertising revenue.
There's advertising on equipment, there's light poles, and there's
bridge houses, I believe.
The RFI that was put out took those each sort
of individually and
there were people who responded
providing detail on how they would go about doing that.
We wanted to make sure that the program is going to be successful because
of the large amount of dollars that this budget anticipates
because we've done this before. The city has done all three of those before, and it
was not successful. So we're trying to learn from the past
and develop a program that is successful.
Until we can get the RFP out and get the
responses back, it's difficult for us to put a number on that.
And when do you anticipate the RFPs going out for
those three items?
Well, the RFP on the sale of debt was already done.
Oh, no, I'm talking about, I'm specifically speaking about advertising.
Advertising revenue. I'll let Steven I think answer next.
Yeah. Thank you, Annette, and thank you, Chairman, for the question.
The
RFP for advertising revenue is projected to go out in September.
That's outlined in the memo that was shared with city council.
The RFP for augmented reality is expected to go out in August.
For the benefit of this group, RFIs, request for information, have
already gone out. For the augmented reality, that went out in February and was
reissued.
The RFI
for advertising revenue went out in March.
Okay. And then you anticipate getting
responses when?
I would anticipate 30 days after release of the RFP.
That's being consistent with our past practice.
I'll ask Chip Hastings, deputy controller.
Chip, does that match your preliminary expectations of 30 days? Okay.
Yeah.
And from there,
we'll have some level of an idea as to what we can anticipate
from a revenue perspective for
advertising.
Correct.
Okay. All right. Very well.
Chairman. Jim.
Go ahead.
Just as a follow-up on your line,
again, just to underscore the frustration that this RFP
process lands us towards the back end of Q4
in the very fiscal year
we needed to realize the revenue.
That, of course, that's a recipe for failure.
So I think one of the learning moments here for future budgets,
all future budgets is we need to find a way to streamline
these procurement pieces and marketing pieces on the front
end. When they're very sensitive and important revenue
streams we rely upon, we need to find some different process
with procurement and the various departments involved to make sure that that
decision-making is done in weeks, not months and quarters.
And that's not
a criticism of the three people here.
That's a flag for we need to improve that process dramatically,
because we can't wait two, three quarters in a budget year where we need the
money to get the process together to then talk about getting the money.
So thank you, Chairman.
Okay. Next we have Alderman Quinn, will
be followed by Alderman O'Shea, and then Alderman Silverstein.
Good morning.
Morning.
Budget director, yesterday it was reported that
CPS is going to lay off
760 teachers,
five furlough days.
My question is, what can we anticipate in terms
of a TIF surplus? Because I don't see a situation where the
mayor of the City of Chicago allows that to happen. So what should we anticipate?
Is it going to be a record TIF surplus?
We are not anticipating a record surplus this year.
We were not involved in the CPS putting a number in their
budget of what the TIF surplus would be.
I'm pretty sure they're probably going to be coming to a lot of you to have that
conversation.
But
we are gearing up to release our second quarter TIF report
this year. This body has been very clear about wanting to get the information
more frequent, and so we are working to make sure that we can do that
and provide you as up to date of a
picture of where we are ahead of budget season.
But we do not anticipate it being a record surplus again.
This body yesterday approved a pretty large, substantial amount
of TIF for a number of projects. So I do not
anticipate it being-
If you could ballpark it?
I can ask my team to look that up for you right now, but I don't have it
off the top of my head. But it's not what it was last year.
In the $175 million pension payment
from CPS for 2026, is there a status on that?
We didn't anticipate a payment from CPS in the 2026 budget,
so the 2026 budget was made without an
agreement with CPS to
pay for that.
So CPS is not paying the $175?
CPS has made it clear for several years now that the only way they would pay the
city
for the portion of their non-teachers in the
MABF fund would be if the city gave them money to do that.
Yeah, I was under the impression this was under some sort of intergovernmental
agreement. Do you recall that intergovernmental agreement, Mr. Chair?
Yeah. So the intergovernmental agreement
that was signed under the former CEO
was in place up until CPS decided not
to reimburse the city in 2024. That automatically ended that IGA.
We entered into a new IGA last year for the payment of the
2025 reimbursement of 175, which we have received in full.
But nothing for
2026?
Not yet.
Okay. And so on May 26th,
before our education committee,
Dr. King said that she's going to be
asking for,
I think, $100 million
through TIF surplus. Do you think we could hold CPS to that?
So the conversations that we've been having with all of
our taxing districts around TIF surplus is that it will not be what it was last
year.
Okay.
And that they should probably go back to
pre-2023 numbers-
Okay
... for the TIF surplus. CPS regularly baked in a $90 to $100
million TIF surplus in their budgets prior to last year.
Sure. Okay. And she also mentioned that they would
be asking to forgo the $175 million.
Is that consistent with what you've been told also?
If we were to ask CPS to make the payment
to us, they would ask for us to give them the money to do so.
Okay. And what steps are taken now that after November of
this year, CPS is going to be fully elected?
What steps are being taken to detangle our finances?
It's a great question.
It's a really great question. I think that it's
something that the city can't do alone.
Understood. Senator Martwick is carrying a bill in Springfield.
Did the administration weigh in on that at any
point?
We did.
Okay. In favor of?
In favor.
Okay.
And so,
this is the same question I posed to Dr.
King in terms of what does that detanglement look like?
Because they're fully elected now.
Right. I think that,
as you saw that you mentioned they just released their budget for next
year, I think that CPS is going to be hard pressed
to
pay for 100% of their own obligations
without support and assistance from the state.
And so with the conversation around
detanglement from the city, which has been in place for
decades, is going to have to come with serious conversations with the state
about additional revenue sources to do that.
Thank you. I have one
sort of clarification question centered around the laborers.
In terms of streets and sanitation laborers versus the
general laborers, can you add some clarity as to what that looks like?
I'm sorry, could you ask-
Of course
... it again?
Yeah, no problem.
So you had mentioned streets and sanitation laborers.
Can you talk about the general laborers also?
Just the title general laborers.
Oof. I am not the expert on the difference between general
laborers and-- Because we have a lot of different laborers that-
Correct, like CDOT laborers, for example.
Right. So we have a pool, and usually CDOT, Streets and
Sans,
Water, and Aviation all have that title within their-
Yeah
... operations. And so a lot of times they bid back and forth-
Sure
... for support, especially as it relates to
different seasonal needs between those three departments.
But I can definitely get more information on that and get back to you, because I'm
not-
Yeah, that would be most helpful. Yep.
You're next. Just wait. You-
I just wanted to follow-
I'm done, so go ahead
There's a difference between-
Go ahead, Ald. Gray
... general labor and sanitation labor.
No, I know. I just, I...
I'm lost.
Go ahead. What's your question?
Well, I'm going to get into that here.
We are significantly down in the Department of Streets and Sanitation,
like 50 trucks out on the street down, 50 motor truck drivers
down. We're also significantly down in laborers with the Department of Streets and
Sanitation.
We're also significantly down with laborers in the Chicago Department of
Transportation. In fact, everybody, there's no paving
going on in the city today.
Transportation sent everybody home.
My question is--
Someone better get on the phone and check on that, by the way, but they were all
sent home about an hour ago.
This administration has never finished the menu program in the first three
summers.
Based on how far behind we are today,
is the plan to privatize the menu
program? Because being down laborers, being down motor
truck drivers,
sending people home today
tells me that we're not looking to complete the menu.
We're not looking to pave the streets of the 50 wards.
So, thank you for the question.
You probably all are aware because you had to drive through it today, we're under a
severe air quality alert because of the wildfires in
Canada, which has serious
implications for the health of our workforce.
I have never heard of any plan or any intention to privatize
anything as it relates to the aldermanic menu.
I think that today they're seriously concerned about the workforce.
So if we've been kept truck-- There's Streets and Sanitation
garbage trucks sitting in the yard today. They're not out on the street.
Are we holding them back, too? They've been locked in the yard for weeks
now.
That's a question for the CDOT commissioner.
We have not impeded their ability to hire laborers.
So if your question is of a budgetary nature-
So we're fully staffed with laborers for the Department of Streets and Sanitation
and the Department of Transportation on paving crews,
on refuse collection?
So I'll do the numbers again. The Streets and Sanitation laborer titles,
they have 103 filled, 33 vacancies, so they're
96% filled. We obviously have attrition that every
department goes through, but we have not held back any ability for them
to hire their laborers. Drivers, they have
689 filled, 86 vacancies. So they're 89% filled.
Again, we have not held back any driver A forms for Streets and
Sanitation. So I think what you're probably seeing are a couple
of things related to normal attrition that happens in that department.
We also know that they have high sick time that a lot of people
take due to
laws that have been put in place that require us to provide sick
time under the state law. So you're probably seeing
more things related to operational management than
budgetary.
I think we should take a real close look at where we're at with
staffing those positions. The worst months for garbage
collection is July and August, and we're short.
I want to be on record. We're short with crews on the street right now
as we speak, as we've been for several weeks now.
And when you don't pick up the garbage in alleys,
for those of us that have worked in the Department of Streets and Sanitation, can
tell you that we get a rat explosion.
So
I hear your point. I do know, because we work with our departments very closely,
that they are actively recruiting drivers right now.
I want to move on to
the advanced pension payment. We budgeted
$260 million this year.
We made the first installment approximately $130 million.
That's a $90 million second payment.
I'd like a yes or no answer. Are we going to make that payment?
We are working on the analysis right now to determine timing and amount.
If I might add to that, right now our biggest
focus is getting them advance payments because of the property tax
delays. That is what they have
come to us and said that they are most concerned about, because they need to make
benefit payments to their members.
So that comes from our cash flow, not the property taxes
that the Cook County Treasurer's office is tasked
with getting to our pension funds.
And we'll be back here next month, August, for the forecast.
Yes.
Will the advanced pension payment be included in that August forecast?
Right now, the budget includes the supplemental pension payment being
paid. As Steven mentioned earlier, because of the delay in the property
taxes,
and the impact on our cash flows, our first biggest
concern is getting essentially the replacement of the property
taxes to our pension funds. And so what we're doing is analysis on our
cash flow to ensure that our cash flow
can
handle both the supplemental payment and the
advanced payments because of the property tax issues.
And so it's a timing question right now.
My next question is for Mr. Belsky.
What happens
with our ratings trajectory
if the second installment of the advanced pension payment isn't made?
What can we expect?
I'll let Steven answer that, but just from my perspective
is that,
it's very hard to predict what the rating agencies are going to do.
And when they put out a report, they do mention-
I have a pretty good idea what they're going to do
... Well, they put out what are called positive
factors, negative factors, what might drive a downgrade.
But they also look at things in totality, right?
So,
if they're saying that
if we don't make the pension payment, they'll take some
action, that could be offset by other
factors, like if we find ways to close the
budget gap or these efficiencies materialize
faster than expected. So, there's four categories they
look at. One is economy. We have a strong economy.
They look at our finances, and that's where some of these issues are.
They look at our debt load. Our debt load is reasonable
except for pensions.
And then they look at management and how management
deals with the challenges we have.
So-
Is that middle management? Because we're heavy on that.
Well, it's just-
I'm sorry, what-
... management is, in general, financial
management, so the three of us up here.
And again, I think if
it comes to that, and I'm not certain that's going to
happen,
we would have to have countervailing factors that we present.
I have one final question.
Go ahead.
And I'd like a yes or no answer on this, too.
Will the administration,
in this next budget,
seek an additional or larger TIF surplus
than we saw last year?
As I just mentioned to Alderman Quinn, it will not
be what you saw last year. Again, we base it
off of what is unallocated at the time of our
calculation, and just based on the number of projects-
What does that mean?
It means it won't be what it was last year.
I don't have the number because actively projects are being
encumbered. They're going through processes. We're meeting with departments.
This is why we calculate it in September of every year.
What about projects that are on hold, say, with a brick on them?
I'm sorry. Projects that are on hold such as what?
Projects that the administration has put on hold or put a brick on them.
I don't know what projects you're referring to.
If you have a list, I can definitely go back.
That would be at Mount Greenwood Park, at Graver Park,
at Beverly Park, at Kennedy Park. Those would all be parks in the 19th
Ward
that the paperwork's been in and the meetings have been held, and discussions have
gone on for the last three years.
If you get me a list, I can check into those for you.
Okay.
Thank you, Alderman
O'Shea.
Next up, we'll have Alderman Silverstein, followed by
Alderman Lopez, followed by Alderman Villegas.
You ready for me, Chair?
Yeah.
Okay.
A lot of my questions actually have just been asked by
my colleagues in front of me. But,
I just want to follow up on some of the frustration that I
think we are having.
We talked about the advanced pension payment that hasn't
been paid yet, and I understand your answer.
Why did we take
slide six down?
Oh, I didn't know where your question was going, so.
Oh. I'm seeing all of these zeros. We don't even
have any numbers there. It's completely zero.
I see in our budget, we
allocated 6.8 million on video gaming,
and our mayor introduced an ordinance to ban video gaming.
And
I find it very frustrating that you say that
here you are trying to implement our budget, and we're
seeing nothing.
So,
could you explain that?
Sure. I think that there's a reality to each of these items that we tried to make
very clear during the budget season last year.
Video gaming license, since you brought it up,
there's been five licenses approved at the state level, which
BACP is actively working to review and
approve on the city side. The $6.8 million that
you see budgeted here was included in City Council's budget, and is based on an
assumption of 3,300 licenses in one year being approved
by the state. That's never happened in the
history of the state approving, especially when we're one
of many cities that sends licenses
from operators to be reviewed and approved by the Illinois Gaming Board.
We wanted, in our analysis of these items last
year, to be very clear about the assumptions being made.
And so,
for any of these,
we're actively working on them. I think the thing that we want to underscore when
it comes to budget is not that these things
aren't things that we can't implement.
It's more about how much of our budget should rely on it,
especially when it takes building something from scratch.
And so sale of debt
is something that we are actively working on.
We've heard from the two entities that bid on that,
that it's unlikely that it'll occur, even if we were to try
to get it done in the amount that has been in the
budget, to try to get it done in one year is
low. And so when we build budgets, we want to make sure our estimates are based
on the reality of what it takes to actually get things done.
So we hear your frustration. We're frustrated, too.
Partly because we provided information to help
us make decisions around the reality of what
it takes to implement these types of things.
And again, I just want to point out that all of these numbers that have zeros by
them are the things that the mayor's opposed to. So...
Being opposed to something is
irrespective of what it takes to actually achieve them.
We are actively working to achieve them.
I'm sorry, but I disagree with that.
I disagree with that 100%, and I think a lot of my colleagues disagree with that as
well. So...
I'm happy to-- I register your frustration, but you have
numerous, countless employees of the City of Chicago working to
enact the budget that City Council passed.
And again, we're six months in already, so to have
nothing there is very frustrating for us.
And I just want to add one more thing.
In our management budget,
we did include
prioritization of city projects receiving state and federal funding,
and there are a few. There's a police station, there's
a firehouse annex in my ward
that we have heard absolutely nothing about.
So again, we're talking about implementing a budget, and
these things aren't even being looked at.
One thing, I just want to clarify something about the debt sale.
The mayor came out and said he did not want to
see any sort of predatory
practices by collectors. So if a buyer of the debt gets
a law firm,
that law firm has to stay within the bounds
of the parameters we set and we use ourselves, and that was
clear in the RFP to any potential placement agent and buyer
that they couldn't participate in these predatory
practices. So he was making a comment about
what he wanted to see happen. And so
the respondents to our RFPs and the people who received
that understood that they had to stay within
standards where there aren't predatory practices.
I don't have anything else. Thank you.
Thank you, Alderman Silverstein. Alderman Quinn?
Possible to get an answer on that question that Alderman Silverstein asked?
Because
I was part of that letter that was sent over to the mayor on
February of 2026 about-
Which?
... the police district and the firehouse. It's in the management ordinance.
The mayor never got back to me.
So I'm just looking for a status. I don't think that's unreasonable.
Okay. We'll direct that to IGA staff to
get you a status on that.
I haven't seen the letter that you're referring to, but as soon as I do, we can
make sure to get a response to you.
I'm glad to hear everyone's working hard on the implementation.
We've been down this road before.
Alderman Lopez, followed by
Alderman Villegas.
Go ahead.
Thank you, Chairman, and good morning, members of the committee.
Good morning to all of you up there.
Good morning.
A couple of things I want to touch on.
First off, I want to join the chorus
that has spoken already today.
I plainly see, as do all of my
constituents, that
if it's not the mayor's priorities, nothing's going to happen.
Our priorities are secondary, and I feel as though that's a story that's
repeating itself both on the financial end and also, as Alderman O'Shea
mentioned, in the wards and communities, because we
are seeing delay, delay, and more delay on
many of the things that are out there.
And we're not even trying to cover it anymore.
For example, one of the things that I wanted to ask, because I don't
think I saw it, is how are we with our own debt,
with our obligation, our geo bonds, and all of
that? Because I
know we talked a lot about citizen debt, but I don't think we had anything specific
about our own debt. And I know you referenced we had a sale with very
limited interest,
but where are we with it? What's the update on that?
So let me be clear.
In the first quarter of this year, we sold
general obligation debt. We also sold some
water revenue bond debt
in the second quarter. Those are the only two bond financings that
we've completed this year. We do have additional transactions on the
calendar for the third and fourth quarter.
Those are separate and distinct from this concept of a
debt sale that's in the-
I know
... that's in the budget, which-
I understand that
... is a bit of a misnomer. It should really be called a sale of uncollected
receivables.
Right. So how are we with our city municipal debt?
Yeah.
When you say how are we, is your question how much have we issued, what's the-
How much have you issued? What's our total? What's the timeline for paying it down?
Okay. So when it comes to general obligation bond debt-
You know what? I'm just going to ask this through the chair because I don't have...
You're doing a very good job of drawing things out-
I'm sorry, the question's not clear
So, if I could have through the chair,
Chairman,
all of the debt sales that we've made this year thus far, what's the
total city debt
in bonds or what have you, and what's the timeline for paying them down?
I'm happy to compile that.
Can't be clear.
And just very briefly, I can tell you-
So if I could also ask-
... we've got 5.8 billion in general obligation debt outstanding as of today.
Excuse me?
We have 5.8 billion worth of general obligation principal outstanding as
of today.
Thank you. So in April, the inspector general listed
nearly $8 billion in debt owed to the city of Chicago,
slightly more than what you referenced on page 13 of your
slide deck.
The inspector general said that we have $3 billion in
administrative hearings,
2.6 billion for parking and vehicle violations,
1.5 billion for EMS. What are we doing to actually
collect on all of those,
other than the selling of that debt to
those six firms that we use?
Well,
I can address this. So again,
one of the things we mentioned, that 75% of
much of our debt is collected
that's three years or younger, so to speak.
So we've been very effective
at collecting that debt.
What you're talking about is what's beyond that period of time.
In DOF,
one of the things we're
ramping up is making it easier for people
to pay their debts.
One is through
an online portal where they'll be able to see all debt owed.
They'll be able to, through
ACH, providing credit card information to be able
to pay that. We're also working really hard to
get
information about relief programs, right?
So if I-
And the other person I would defer to on this-
If I may, because I've only got two minutes.
Is our head of department.
So thank you.
Okay.
With regards to the business tax and all the other departmental things that we
oftentimes don't fully staff with regards for inspections and for
processing, that's roughly $60 million
that we have outstanding. What are we doing to go after that money?
Can you repeat the question?
So business tax debt is at $38 million.
Building inspection fees and things of that nature are at $21 million.
What are we doing to go after that outstanding debt?
Because many of those things would also be noticeable if they were doing
debt checks when they apply for their licenses or permits.
So what are we doing to collect that?
So as you know, we added personnel for
that sort of
collection,
and we're ahead of schedule on that.
So I want to defer to Brian
Carlson, our deputy, who-
He could talk after I'm done, because I'm on a time limit, and
I need to also ask these things. In April,
you shared with us
timelines for vehicle debt sales, augmented reality and enhanced
marketing, all the things that were in the zero column.
Knowing that that was the will of this
body, why did we drag it out further with having RFIs as opposed to just
putting out an RFP to start implementing those
various programs that the city council had allowed for?
And is your question about the augmented reality as well as marketing and
advertising?
Mm-hmm.
Yeah.
So we didn't want to get this wrong.
That timeline.
Correct. Yep. There are two memos shared through the
chair
in anticipation of these kinds of questions.
The RFIs for augmented reality and marketing and advertising were issued
to really get a sense of the market.
The last thing that we wanted to do was to issue an RFP that was not
addressing what city council expected us to address.
So did you issue an RFI when you hired Ernst & Young, or did you just go straight
to hiring them?
Annette, do you recall the process?
So EY is a known entity that the city works with and
has actually worked with several times under past administrations to do
similar work before. I think what
What Steven is trying to tell you is we've never done augmented
reality before. We haven't found a city that we could've called to say, "How did
you do this?" So in order to make sure that we put out an RFP that was informed,
and the scope is something that people could actually respond to, we had to test
the market to understand how to actually draft an RFP scope.
Well, respectfully, every time this administration does RFIs,
it's a delay tactic.
No.
We saw an RFI done for gunshot detection technology, which has
set in limbo for a year and a half. So this
tactic is presenting itself time and time again on
priorities that are not this administration's liking.
So I don't think it's out of bounds to say that
every time we see this, it's just a delay
tactic to avoid what this majority wants to do,
just to appease us and say, "Well, we tried. It took too long. We couldn't do it.
Now we're going to move on back to plan B." Thank you, Chairman.
You're definitely entitled to your opinion, and I can't change that for you.
But what we have done through the RFIs is
to make sure that we are putting out something that could be
achievable and successful because of the targets that were given to us by City
Council.
All right. Next we have Alderman Villegas,
followed by Alderman Lospada, followed by
Alderman Rodriguez Sanchez.
Thank you, Mr. Chairman.
I just wanted to... A couple of questions.
Time and attendance,
a topic I've been talking about.
It's been four years,
$40 million a year that we're leaving on the table, so that's $160 million that
we've failed to do. My understanding is that it's still in
procurement.
It's not. It's not in procurement.
Not in procurement.
It's not in procurement. We are launching with our implementer.
I'm very excited to tell you that. You'll get that update in the next
joint meeting with the budget and ECTD committee.
We are launching.
Okay. Finally. Thank you.
Time and attendance. Oh, $8.1 billion in debt.
Is there any consideration of writing that off?
Look,
that's half of our budget, approximately,
$16.6 billion, $8.1.
And it just doesn't look good. The fact is, is that
we got to do a better job of what the strategy's going to be around that.
And so
we want to try to figure out what needs to be done in order to
try to write this $8.1 billion off.
I can respond.
Can I just say something about the budgetary part of it?
Let's not...
That money that's sitting there is not in the budget, right?
It's sitting in a ledger that is theoretically
collectible, but writing it off does not, from an accounting
perspective, do anything to help or
hurt. By leaving it there, it does give us some ability to
collect, but once we write it off, we're basically saying it's gone forever.
So I would agree with you to a certain extent, Chairman,
but when you're talking about debt that's over two decades
old, at some point you've got to get it off the books.
It's not on the books.
It is being accounted for in some manner.
No. It's in a ledger, but it's not on the books.
And what if somebody hits the lottery? And we can get the money, right?
We don't want to write it off unnecessarily.
This is my position, but I'll let the master at that just want to put that-
Yeah, of course. I just wanted to say, the Chairman is right.
This is not $8 billion that's budgeted.
So we are not expecting to estimate-
No, it is budgeted because fines and fees that are in the
budget are presumed to be collected in order to make the
budget balance.
No. So just like all of our revenue sources, we make an estimate of what
we anticipate receiving, and the fine and
fee
estimate that we have is largely based on new violations that we
anticipate collecting on for that year.
The overdue amounts, we make very small estimates, but-
Budget director, you said that you anticipate collecting, but
the budget does include fines and fees-
Yes
... that's associated with a dollar amount in order to make the balanced budget.
Yes, but it's based on new violations.
What we're talking about in the sale of debt is based on past
due-
No, I understand that, but what I'm saying is that fines and fees
are part of making a balanced budget.
What I'm saying is that $8.1 billion of that has not been collected,
and so it has impacted our budget over the years because we've had to figure out
how to close that gap on those items.
Some items perform better, some perform less, and then it equals out.
Yeah. So I'm happy to have an offline conversation with you because I think it's
important that we align on
this point for you, because I think that
understanding what we budget for and this outstanding
amount that is on our accounting ledger is going to be really important
for us to be able to separate. We do make an estimate on fines and fees
every year based on the activities that happen in that year,
and mostly on new violations, not on past due amounts.
When we collect on past due amounts, it absolutely helps us
bring in revenue to help support our budget, but it's not what we base our budget
on. So every year we have parking enforcement aides,
we have
streets and sands, we have all these departments that are writing tickets, and
we base our budgetary amount for that year on how much of that are
people going to actually pay.
Got you.
But the $8 billion is not what our budget is based on.
Alderman, I would just add to that, that number's out there.
We know about it. It's in the media. We speak about it.
We talked about it with regard to the debt sale.
That number's out there. We have talked about
implementing a write-off policy. Other cities are doing it.
We put it on pause because if we were to do that
And we're doing a debt sale. In the process of a debt sale, we'd be cannibalizing-
No, I get that
... debt that these firms might want to buy.
So,
it is on the Department of Finance's radar, it's being
discussed, but we need to, as
Steven said, we're talking to the other placement
agent respondent. So,
until that
is dispositive one way or another, whether the debt's sold or we
don't sell it,
then we can take that out.
Okay.
So then, as it relates to collections, I know
that there's two parts, internal and external.
So internally, I thought I saw a screen,
22%,
or maybe it's higher. 22%.
Yeah, right there. Increase in enforcement.
So we're tracking the same as for
'25, '26?
I don't have the numbers for 2026. We're trying to do apples to apples, so full
year-
Yeah. Oh, okay
... year over year
looks. So I think what has been said a couple of times, and
this slide is purely about AH judgments and enforcement of
AH debt. What the overall sort of
thing that we're trying to help City Council understand is that in all of our
categories, we are up in collections through
enforcement.
David Holekamp mentioned that in 2024, they created a brand-new
division that really goes after enforcing debt
in both AH judgments, particularly because of the liens that we're able to
file on properties, which helps us make those
property owners clean up their properties,
makes them get into compliance with city code.
They have gone after bad actors, like the Susie Q example,
where she owed $15 million to the city, and
through a number of court cases, we were able to actually close
on that judgment and get her to pay us back.
But in all of our categories, which slides 18 through
20 show, we are actually seeing increased
revenue come back to the city for the debt that's owed.
This is not the collections, this is enforcement collections,
through those stepped-up enforcement mechanisms that-
So then I'm going to make a comment, then a question.
So when the city is pursuing this debt that's owed,
does that seem immoral to try to collect money
that's owed to the city because of an infraction?
No, but I-
Like, no
... I don't think going after money that-
Like that's owed, it's just part of a budget.
We're trying to make sure that-
Right
... citizens... So I wouldn't say it's immoral, but...
So
and then my last question is this. I see that you did the slides with the six
items that
you highlighted.
Could you, through the chair, provide a list of every item,
whether it's tracking up or down? Because I'd like to see not just those, I'd like
to see all of them.
Yeah.
Because this is a budget that ultimately the City Council passed,
the administration has to implement.
And because it appears, again, the appearance, I'm not saying
anything, it just appears to be a dereliction of
duty
by this administration. And so we want to work with you to figure out what we can
do to
make this budget work. You've seen a lot of
ideas that have been put forward.
Because at the end of the day, we have to grow this economy, we have
to grow the new tax base.
And as we're talking about trying to cut red tape and stuff like
that, I think we want to collaborate on figuring out how to do that. So, Mr.
Chairman, thank you for that, and thank you guys.
And I'm happy to hear you say that because we would appreciate the collaboration.
We actually do send you a report every month.
The monthly revenue report actually shows the tracking of every single revenue
source-
Perfect
... that you can look. And if you have any questions-
Thank you
... about any particular revenue, we're happy to do that.
To the point about do we think it's immoral to collect on revenues,
no, it's not immoral.
Okay, no.
I think what we focus on,
is we don't use predatory practices to do that, right?
We look through data-driven process that the Department of Law has put in
place. We're going after those that we know can pay.
No, but, well, predatory would be subjective.
Because does the administrator hearing call people and say, "Hey, you owe us
money?"
What we do, and David Holekamp can talk at more length about this, is
we are looking at primarily the ones that we know can pay
that are just not paying, right? I think that what we are concerned about
and
why we've gone the route of doing what we consider to be an
equity-based approach is a lot of
companies that you sell your debt to, they don't care.
They go after everyone, no matter what your income is, and they use pretty
deplorable practices to do that. So-
No, but I thought that we had talked that during the RFP process
that there would be guardrails that would be implemented and there would be a lot
of discussion. So we would put that stuff in there in order to make
sure that we were trying to collect on the debt, but also did it in a responsible
manner that was moral.
Yeah.
We collect on it, right? And we don't use predatory-
It's also the song "Bothered," right?
Could you mute yourself, please?
You know Michael Merchant?
Thank you, Mr. Chairman.
Yeah, Michael Merchant is the one of the heroes that-
Could you mute Robinson, please?
... they would put in different places.
So he was-
Could you mute Alderman Robinson?
... at one point he was CHA.
Yeah.
Hello.
Can you mute Alderman Robinson?
Thank you. So I think we can put a lot of things
into an RFP, into a contract. I think
that a company that would
purchase this debt would insist upon being able to use any tool in their
toolbox to achieve the returns on their investment
... guardrails that the,
within the guardrails that the city has put in the RFP or within the contract.
We can try to put those in the contract.
I think it would depend
upon a lot of things, including whether or not putting those in the
contract would actually get us any buyers.
Because again, if you're buying an asset, you want to be able to
use every tool in your toolbox to get the return on your investment.
All right. Okay.
Next up we have Alderman Lospada,
followed by Alderman David Moore.
Thank you very much, Chair. I want to start with a through the Chair request.
I'd like to understand the percentage of turnover
goal for each department so far this year, if that could be provided.
It's actually in the report. The midyear report has the turnover target for every
single department and if they've achieved it.
Okay.
I'd like to go to the ACFR slide.
Comptroller, so I'm curious, the $219 million
general fund surplus,
how is that reflected in the budget documents in front of us?
Excuse me, can you repeat the question? I'm sorry.
The $219 million general fund surplus, how
is that reflected in the budget documents?
When I look at
page five, for example, where would I
find that?
In the budget or the ACFR? You're talking about the financial-
I feel like I'm--
Sorry. So if we,
help me interpret then to start-
Okay
... what a $219 million general fund surplus means
in terms of the finances of the city.
Okay. The general fund
surplus of $219 million is on a
cash basis, the difference between total revenues
in '24
and total revenues in '25. And that was an
8% increase, plus we had a
0.6% increase in expenditures, a modest
increase in expenditures. So the difference between
those two is $219 million.
That compares to 162 in the negative last year.
So that, again, is on a budgetary basis, cash basis.
That's what that represents.
So is it accurate or inaccurate to read
that, that we ended up
with a cash surplus at the end of 2025?
Correct.
Sorry, I didn't ask that as a yes or no question.
Is it accurate or inaccurate to read that, that we
ended up with 219 million as a cash
surplus?
Yes.
It's accurate.
I feel like I'm doing something wrong here.
So it is accurate to say that we ended the year with a
$219 million
cash surplus?
In the general fund.
Okay. So then where would I see that
reflected in terms of page five when I look at our
revenues?
When you look at which document?
I think it's a question of which document are you looking at.
When I look at the midyear budget report.
The midyear budget report is about 2026.
This is about the end of year 2025.
So then let me ask it like this. At the end of 2025,
where did the $219 million cash surplus go?
It goes into the reserves. So it's-
So-
Part of fund balance
... so then that just goes into our reserves.
So how, what, and for the question that was launched to
me from a colleague, what page of the ACFR is that $219 million
cash surplus shown on?
What page of the ACFR is that surplus shown on?
Sorry, it's hard to hear, so that's why.
What page of the ACFR is the cash
surplus shown on?
Well, it would be in the
general fund results, basically the income statement, and what
it shows is 219 million
in budgetary results.
And when we end with-- Thank you. And when we end with a surplus, what I'm trying
to understand
is why that goes into the reserves rather than
helping us prepare for the gap that we're seeing in this year's budget.
So again, the ACFR is a snapshot in time.
It's a financial statement. The budget is an
appropriation that is done through legislation.
So it's not as if we end the year and it automatically is used because you haven't
appropriated it.
Let me
try to ask this.
I feel like I'm sounding confusing, and I'm not-
No. So here's what you're trying to understand.
So in past years, we have appropriated fund balance.
What they have done is kind of given you an accounting for what happened
totally last year, and after all of the accounting is done, because at the time,
we don't know what the true ending fund balance will be.
Yes, but now we do. And so here's how I'm trying to ask this question,
sir. So it was just said we ended the year with a
$219 million surplus. At the end of
2025, those dollars went into the reserve.
We now are saying that we have a gap this year.
My question is,
why do those funds not stay in the corporate fund to help us
prepare for a gap that we may be seeing?
They do stay in the corporate fund. They just become part of the fund balance.
Now-
That's not what they just said.
That is what I just said.
That is what she just said.
I was told that they went into the reserves.
But it's the fund balance.
It's the fund balance.
Okay. I thought that our reserves We're separate from the fund balance because
that's how it's been communicated in the past.
I don't want to belabor this point, which I feel like I have.
So let me go with the two minutes I have left.
I'm curious,
and again, we're going to the enterprise fund.
I'm curious when the
water and sewer enterprises funds
so far exceed the expenditures
of the corresponding departments,
why are we collecting so much more in revenue than it takes to
operate those departments?
So,
the other thing that both water and sewer and aviation have in common is that we
sell a lot of aviation bonds, and we sell a lot of
water and sewer bonds. And so a lot of those sit in reserves,
not only for operations in the next year, but also because we have debt service
that we pay over time and not in that specific year.
So when Chicagoans see that these departments have north of,
for the waterfront for example, around $2 billion in
reserves,
how do we account for the use of those reserves?
So aviation in particular-
I asked about the water department.
I'm sorry
So the water department in particular, both of them,
just as good practice, you want to build reserves because of
future potential unanticipated events.
But again, both of those departments, and water and sewer in particular, have
water bonds that have water covenants in those bonds that we have to
pay debt service back over time. Debt service isn't just due in one year,
it's due over time. And so a lot of that is meant to help
support those water bonds, which are used to implement critical
infrastructure to our water mains, our sewer mains, and the like
for the entire city.
I'll follow up with the comptroller on that because I'm
genuinely curious.
I
can address if you want-
And then sir, I'll have a final question I want to-
About the water bonds. So when we issue debt for any
enterprise, water, sewer,
airports, as Annette mentioned, there are covenants and
there's an indenture, and the indenture is a contract between the bond
holders and the city. One of the most important covenants
is the rate covenant, and the rate covenant says you have to
charge rates that cover debt service by
some factor over 100. So it's like
1.25 times. So you always build in this
25% reserve. There's another covenant that's called flow
of funds, and it's a cash flow waterfall.
Revenues come in, they go to pay debt service.
After that, they operate the system, and then what's left
over goes into what's called the replacement fund.
And that's what's accumulated. The reason you want that there is it
obviates the need for the issuance of future debt.
If you have cash, you don't have to borrow as much.
So the structure of bond indentures
require you to always have extra money,
and you can't really violate that unless you ask
all bond holders to change it, right?
I'll follow up with you offline. I had one final question with my
time, which was exhausted. So I would understand how an
advertising line item could underperform
expectations.
I'm trying to understand the 0.00, because I look at all of our
sister agencies, and if I go under any
park district underpass, there's advertising there.
The CTA seems to have found the path on this.
Looking towards 2027, because
I'm not on OK.
With
that,
we're going to go to Alderman Moore.
Alderman Moore?
Yes, sir.
You may proceed.
Thank you so much.
The real quick questions
First, as it relates to, just for the record,
money that's been allocated, whether it's infrastructure or dollars or
infrastructure, whether it's menu or infrastructure dollars that's been
allocated for projects,
none of that money or projects are being held
to reserve that money to cover the budget, correct?
If you're asking if we have delayed projects in order to
cover the gap, we have not.
Okay. So all those projects, if they've been funded,
should
be done this year, right?
Yeah, that's a completely different
budget. That's the capital budget, which is our bonds, TIF,
and other resources. So that isn't an implication on the
corporate or general fund.
Okay.
My next question has to do with
sales tax and the bag tax we talked
about. We talked about, and I got to be careful when I say sales tax
because I guess it's all incorporated in, but when we
saying we're not
realizing the revenues
or lower than expected revenues from the bag tax, are
we seeing a
similar
reduction in sales taxes, or are we
okay? So to understand what I'm asking, if I was going to the
store, now I'm not going to the store in Chicago, so the sales tax should be
possibly decreasing. I don't want it to, but I want to just be honest
and for the record. Are we seeing any decreases in that?
So I'll take it in two different ways.
So when you go to the grocery store, what used to be in place in the city of
Chicago was the grocery
tax. That was
repealed by the state in 2024,
implemented in 2025. The city decided not to
reinstitute a grocery tax in 2026, and
so we did not budget for a grocery tax this year.
So that isn't included at all in our revenue streams.
When it comes to the check-
I'm sorry, and I didn't mean to cut you off. Go ahead and finish.
So I'm sorry for cutting you off. Go ahead and finish.
No, you're fine. When it comes to the checkout bag tax, I do want to put it into
context, right? It's $38 million of our budget.
We are slightly behind in 2026 by about
$1.1 million. In the '26 budget, we
increased, or in the final budget that was passed by city
council, the checkout bag tax was increased from 10 cents per bag
to 15 cents per bag. This is a highly elastic revenue,
meaning that it is really elastic on consumer behavior.
And so as you continue to increase the checkout bag
tax, we do anticipate and did anticipate that consumers would
shift to alternatives so that they wouldn't have to pay that.
This is similar to other types of taxes that are highly elastic, like the cigarette
tax. There's a certain threshold where consumer behavior
will start to change in order to avoid the tax in its
entirety.
Okay.
And you may have answered my question, but I'm not 100% sure.
So I did understand and realize the grocery tax piece, that
that wasn't there anymore. What I'm asking is, but we do charge tax on...
There is a tax though, right? We do get a tax on if
somebody go to the grocery store for something, right?
Or you just go to the grocery store, whether I buy aluminum foil, whether
I buy anything, that's not taxed at all.
It's just if my bill is $5, then I pay $5.
I don't think that's the case, right? It's a sales tax, correct?
In the state of Illinois,
what used to be in place was a grocery tax on
groceries, which is separate and apart from the sales tax.
That's-
When the state repealed it,
they allowed cities to put it back in place a- and reinstate it if they wanted to.
The city of Chicago did not.
Right. And I know that part. So what I'm saying is that we are still
then
charging a sales tax or no?
No.
Hmm. I got to look at line 15.
Not on grocery goods, no.
I think what you're trying to understand is the differentiation between
what is technically considered a grocery item versus other
items that are subject to the sales tax.
Now, the grocery tax was put in so that there'd be uniformity across the
state on groceries versus
the sales tax in Chicago is one thing, Oak Park is something else,
Pilsen or somewhere else. It's different, right?
So it was uniform. Now it doesn't exist for us in the city of Chicago, but there
are still other items that you purchase at the grocery store that are still
subject to the sales tax.
Sales tax, correct.
Okay.
Thank you, Chairman. And that's what I'm getting at.
Are we seeing any
related reduction in that as we are-- And I know you're saying
the bag tax is elastic, but are we seeing any reduction
in that?
Our sales tax residual, so just to be clear, most of our sales
tax that is collected in the city of Chicago actually goes straight to the Sales
Tax Securitization Corporation for the repayment of STSC
bonds. We do get a residual amount after the bond
debt service payments are satisfied each month.
We are not seeing a decline in our sales tax residual as of
today.
Okay. And the only reason why I was asking, because I do hear
residents say, and I didn't know how big it was, that, "You
know what? With this bag tax thing and this increase, I just go over to
Evergreen Park, or I just go over here because I'm not paying any taxes on no
bag." So I was just trying to see if we were impacted, and
if we were. We are, but I don't know to what degree.
Because if one person's saying it, then that's money that we're not getting, even
if it's one person. So I was just trying to see if there was a
correlated impact, that's all.
And you're saying it's not significant if it is, right?
The sales tax, currently consumer behavior,
we have not seen a decline in that.
Okay. And then my last question is,
now this may have to come through the
chair. When we're dealing with this TIF, and we already know when
TIF was created, what it was for, and somewhat it has, and I'm going to be honest,
gotten out of hand into areas that are not blighted, right?
And so what is the dollar if CPS
wasn't involved in TIF, okay? What if we excluded
CPS as a whole? What is that
impact? And then what potential monies are we then bringing in to
help for development from a TIF standpoint?
I'm sorry, you're saying if we did not provide TIF dollars to
CPS projects?
No, no, no.
There's an increment that would go
to CPS if we didn't have TIF,
correct?
Oh.
That's correct.
So yes. Okay. I think I understand your question.
So TIF surplus is a reflection of the
percentage basis of a taxing district within the property tax.
CPS is the largest
percentage of property tax in this Cook County, and between
52% to 54%. So if we did not have TIF
districts and the property taxes just flowed to the taxing districts,
CPS would-
No, no, no. Not to all the taxing district. You're on track.
But if we did have TIF,
but we excluded CPS. I don't know if we could, I'm just asking.
We cannot.
No.
Okay. Thank you. All right. Thank you.
That answers my question. Thank you, Chairman.
All right. Thank you,
Alderman Moore.
Alderman Rodriguez Sanchez, are you ready?
Yes, I'm here.
All right. Followed by Alderman Nugent, followed by Alderman Martin.
First I want to say thank you
to Annette, and Steven, and
Comptroller. I
feel like this hearing has been a full gas lighting
session of people who propose
measures for revenue that were impossible to
meet, and now are coming here outraged at the fact that we don't
have the revenue that was not going to happen because it was a
stunt. So I want to say that out loud because I think somebody has
to. Thank you
for the work that you have done, Annette, and thank you for
your composure and all the patience that you have had in this hearing, because I
honestly don't know how
you have done this.
I want to ask,
I would like for somebody to tell me
what work has been done to attempt to meet the revenue
goals, particularly as it pertains to starting a brand new
municipal marketing and advertising program, and creating
the new augmented reality program.
Because it seems like people in this chamber are acting
like nothing has been done.
And I hope that is not a reflection of how people
behave in their own work. Because the
idea that because the administration didn't agree with these
measures, that they're just not going to do it
is outrageous to me.
Can somebody talk about the steps that were taken to meet these
revenue goals?
Yes, Alder. Thank you for your question, and I know that this has come
up
earlier as well. So
when it comes to the augmented reality
component, and I'll just go through the timeline that we laid
out.
In February, we issued an RFI, so it was February 10th.
So just a short period of time after
the budget was enacted in late December.
That RFI was open for approximately 30 days.
We didn't receive any responses. It's reissued on
April 2nd,
extended through May 2nd when it closed, and we got two
responses. It's been mentioned before that
this type of program, to the best of our knowledge, has not been instituted
in any
major city, any city for that matter, across the United States, which
I think is reflected in the fact that we only had two responses.
Over the course of the month of May, DOF reviewed those responses in
coordination with DPS.
There were a series of meetings to transition
the RFI over to an RFP process with the
chief procurement officer and DPS.
Over the course of the month of June, additional work was done.
And as it's laid out in the timeline and document that was sent to
city council, RFP for the augmented reality expected to be released in
August 2026. This has been a multi-team,
multi-department effort over the first half of
2026 to try to establish a program that has been
established in no other place to the best of our knowledge.
And also importantly,
a program for the city that could be operational, functional, and actually generate
revenue.
When it comes-
So-- Yeah, go ahead. Sorry.
Yeah. Thank you. When it comes to marketing and
advertising, a similar but slightly different process.
RFI, early in the year,
outstanding for 30 days, received approximately five responses,
although those responses differed in terms of their scope.
We had, I think, three responses that were complete
and full-throated, and a couple of responses that were impartial.
In any case,
that particular project is maybe even more expansive because of the
number of
assets that are at play. Again, this is bridge houses, lampposts,
a number of other items that were identified in the management ordinance,
including large city-owned vehicles.
So it's been a broad-based effort
to get that RFI out the door, reviewed, and
now into a
formal RFP stage in coordination with DPS and
CPO, expected to be released in September 2026, as I mentioned earlier.
So I think the main point I want to relay is
that these have been
large efforts that have been done
methodically with various city departments,
so that when we receive responses to the RFP, we can take
actionable steps towards generating revenue on both fronts.
Thank you so much for that thorough explanation.
Was any department where you all consulted about
feasibility and if this could have actually
worked? Or was this just done without any input
from budget and from the city
departments?
When the budget was passed last year, to the best of my
knowledge, the concept of augmented reality
revenues was introduced very late
in the game without consideration from the Office of Budget Management, and
certainly not with consideration from my team, who
manages public-private partnerships more broadly.
With regards to
advertising, I believe that had been floated previously, but again, was something
that was added to the budget very near the end of the process.
And the thing that could've been more helpful
is for OBM, the CFO's office, and DOF to really
provide this city council with additional insight into
what the timing of those revenues could look like, as well as the
amounts. I think both on the timing front and the amount front,
relevant city departments were not consulted, certainly not with sufficient time
there in December.
So yes or no question, do you think that budgeting
$29.3 million for a brand new municipal marketing
program and $6 million for an augmented reality
program in one fiscal year was prudent?
Can you ask that question again? I misheard the very last part.
I want to know if it was prudent
to budget
$29.3 million for a brand new municipal
marketing program and $6 million for a brand new augmented
reality program. Do we think that that was prudent?
The ideas
may be worth exploring, but the amounts and the timing
lacked some prudence.
Right.
I'm going to leave it there, but I do want to say that for a council
that is so opposed to socialist and that call us the
people that are with the pie in the sky ideas, this is pretty
incredible.
To put forward a bunch of measures that were not
well-researched, that were impossible to
be able to implement, and then come here and be outraged about
lack of resources and problems
operationally.
Thank you so much for your time. Thank you, Chair.
Thank you. Next up, we've got Alderman Nugen, followed by Alderman Martin.
Thank you, Mr. Chair.
Are you guys familiar with "Pokémon Go"?
Yes. So "Pokémon Go" is augmented reality,
and in June of this year, they had an event here in the city of
Chicago.
Over 717,000 people
participated in this "Pokémon Go" event, which is augmented
reality.
Of the 717,000,
103,605 folks
participated and bought tickets.
Not just participated, purchased tickets.
So I don't think it's pie in the sky when we're looking for augmented reality
as a potential source of revenue generation in the city of Chicago, and
also an opportunity to bring people here and highlight some of
the really exceptional parks, museums, campuses, things that we
have. And so, I just want to bring that up.
I know a minute ago, we were going through the timeline of
the augmented reality.
I just want to make sure that
my dates are correct. I think
per the management ordinance, I believe the CFO was supposed to
submit proposals to council for approval of AR marketing program
by February 15th, right?
I would have to go back and look at the exact
language in the ordinance. We did release that RFI on February
10th.
You did.
But I believe in the management ordinance, we were supposed to be
reviewing proposals as a body politic on the 15th.
So we passed a budget on December 29th.
It said we were going to see proposals on the 15th of February, and you guys,
I believe, put out an RFI on the 10th.
Were you-
What I'm saying is-
Are you suggesting that proposals from firms were supposed to be
received by mid-February?
According to the management ordinance, we were supposed to have proposals
February 15th. Now, you guys put out an RFI on February
10th. So what that shows me is that whilst you were working
towards a goal, it doesn't appear that folks were in any hurry to
move on something that was passed on December 29th.
I would respectfully disagree with the speed at which we were-
But we can agree that-
Especially-
... the dates are accurate that I'm speaking to?
I can tell you that February 10th is when the RFI was released.
Okay.
So it's my understanding-- Now, it sounds like you received five
folks that submitted some stuff. It was my understanding that there might only be
one group that could really do this, but I don't purport to be an expert.
Are you releasing an RFP now in August or September? Is that what I'm hearing?
That's correct. For
augmented reality in August, and advertising and marketing in
September.
But based on the responses that you received, could you not
have created a pilot or worked with a vendor,
in the last two quarters of the year to potentially test out
augmented reality in the city? It just seems we're awfully far into
the year to be releasing an RFP for numbers that we should be realizing.
We have tried our best to develop a process
that would produce
as good a possible outcome
for the city as we reasonably thought we could.
Again, I want to emphasize that I appreciate the reference to Pokemon
Go. I appreciate the number of people that have come to the city.
I was walking through Lincoln Park, I believe,
in
maybe late June or early July when that activity was going on.
But there's no precedent for this.
No.
There's no other local government that has a program like this.
No, but we have an opportunity-
Agreed
... to participate in something that could generate a lot of revenue for the city,
and I don't believe there's the sense of urgency,
with respect to AR. I know we were talking about advertising
revenue,
and
I guess I'm confused with why we would even be contemplating an
RFI or why we aren't moving on an RFP with
advertising. Just a quick scan
of sister agencies and their advertising and the
relationships, JC Deaux, Clear Channel at the airports,
Intersection at the CTA.
Parks has a vendor that I believe is StreetSmart, that does all their
media. Lakefront Advertising, Municipal Media.
Why are we unable, as the city, to move forward on advertising
when our sister agencies who, whilst they're not able
to apparently pay their
city owed debt, they are able to effectuate an amazing advertising program?
Help me understand.
As I mentioned earlier, we do have a partnership with JC Deaux that's been around
for more than 20 years now. So the city's not unfamiliar with the
idea of generating revenue through marketing and advertising.
And again, I can't speak to sister agencies.
Are we going to have an RFP out
on advertising?
As outlined in the memo that was shared with council in advance of this meeting,
yes. In September.
Taking us nine months to come up with an RFP for advertising.
Couldn't you have just piggybacked off of a sister agency's contract vehicle?
Could we have piggybacked off of sister agency's advertising vehicle?
The answer is yes.
I don't believe so.
I think you could.
Madam Budget Chair?
I think that,
we would face, and what we've seen this a lot of times with procurements, a number
of companies who would say, "I can do that too." And so that's why we enter into
RFPs, because this is not a space that
only one entity can do it. And so we put out
RFPs because we are required by our procurement code to
ensure that all entities that have the ability to provide a service are given
the ability to bid on that service.
But we could have theoretically looked at an RFP that a sister agency had put
out, and perhaps used that as a blueprint to have gotten something out
in maybe Q1 of 2026?
For advertising?
Yes.
So I do not believe that they advertise on bridge houses,
on our equipment, or on light poles.
But theoretically, we could have lifted or
utilized 75% of a sister agency's contract, and then done-
If those sister agencies advertise on bridge houses, light poles,
and
our equipment, then that would be possible.
But again-
It could be possible. That's cool. I appreciate that. I have 24 seconds left.
I'm really sad that procurement is not here, but could
anybody up front answer, have we done anything in procurement to
reduce the city's maverick spend, which is spend that we do off contract?
UI's report said we have over 50% maverick spend.
Why do we have it?
No, I know. I'm asking, have we reduced the number of maverick spend?
So I was able to meet with procurement last week
to go through their roadmap, which is also reflected in the reports that we provide
you on a monthly basis. They are implementing a number of
new processes with departments to reduce maverick spend.
They're also looking at why our procurement code allows a number
of offices to have procurement authority to make recommendations for how to
shift, and put ordinance proposals in front of city council.
Mr.
Chair, may I ask one last question?
Go ahead.
Do we have an actual number of the reduction in maverick spend?
I can get that for you through the chair.
Thank you. And I would be grateful then if we do these.
I think procurement should always be included in this.
I think it's really important. Thank you, Mr. Chair.
Thank you. Alder Martin.
Thank you, Chairman, and
good afternoon, everybody. I wanted to start with a quick through-the-chair
question. I understand that there are 37 tax
auditors that are assigned to the Department of Finance.
If you could provide
the number of tax auditors over the last seven years, including
2026,
how many of those positions have been filled versus just vacant,
and the non-exhaustive summary of which
departments they focus most on. Through the chair, because I've got other questions
I want to get to.
We do have the head of the tax department here that can provide you with that.
Through the chair would be terrific.
Okay. So presentation mentioned projected year-end budget gap
of 89.3 million. What's the current
budget gap year to date?
So I don't have it off the top of my head, but you don't look at it as in the
middle of the year because our revenues come in at a different pace than our
expenditures are spent. So that's why you look at it at an annualized basis.
Understanding that, yeah. Because I know that from a revenue perspective,
sometimes you're going to have a lot of revenues come in through the summer, say
with summer festival-related incidents.
But still, even through the chair, understanding with those caveats, provide
all those. It would just be good to know what it is
currently.
How many positions overall were eliminated as part of
the FY 2026 budgeting process?
Oh, you're stretching my memory here. I can get you that through the chair.
Okay.
And
do you know how many vacancies the city started the
current fiscal year with?
Yeah, it's in the mid-year report. Just give me one second.
You know what? Let me
have my team pull it up and get that for you.
That's great. And if you could also
note the current number of vacant positions year to date-
Yes
... that would be terrific-
Yep
... through the chair.
So I know that a number of
vacancies, I think well over 1,000, maybe over 2,000, were
eliminated in the current fiscal year budget, and I would have
expected the vacancy rate to drop quite
significantly, more than, I think, the 1.1% that was noted on
one of the slides. Is that because we still
have a good number of vacancies that we're holding because of
the hiring freeze?
So we do have a hiring freeze in place for specific positions as
we carry out the organizational analysis.
But
we do have attrition that happens throughout the year, and in specific
departments we're seeing higher attrition than normal, and we can
definitely highlight which of those departments are seeing that for you.
Be helpful. And if you could also note how much money the city, over the
course of the entire fiscal year, is projected to save due to the hiring
freeze, that would be helpful. And then lastly, on the hiring freeze front,
if you could note the exact contours of it.
I recall, and this might have been more of a press-related conversation, that it
was to extend to most every city department with exceptions
for public safety positions, revenue-generating positions.
I know that that's not the case in practice, so it'd be good to know what the
precise contours are of the hiring freeze point in time.
Sure.
What are the corporate fund expenditures year to date, and how does
that compare to what was budgeted year to date?
The corporate fund expenditures year to date through May, because
this is what the report is reflecting.
Let me get that for you.
Sorry.
Think.
Let me get that for you. I don't have it off the top of my head, but my team will
get that for me.
Great. And if you could also note how that compares to what was budgeted,
in case I didn't ask that. So that'd be good.
Organizational optimization. So slide four,
the efficiency initiatives. Can you remind me
what that amounts to and what the-
Yeah
... specific cost savings number is associated?
Slide four.
Oh, sorry. You had eight up. Well, if eight is a
good
way to explain. My apologies. I was just kind of writing stuff that was coming
through. So yeah, however you want to describe.
Yeah.
And then the overall number associated with that.
Sure. So the efficiency initiatives are both revenue generating
and cost savings. So when you add them all up, and I believe we put
this in a memo to you early last year,
it's around $90 million.
Okay. If you could just re-share that.
Just on those initiatives.
Yeah, if you could re-share that through the chair.
Yep, I'll get that memo back to you.
That would be great.
Your question about startup vacancies for 2026 was
3,719 vacancies.
Say that one more time, please.
3,719.
That's current?
That was at the beginning of the year.
Oh.
And we'll get you the current one.
Okay.
Can you provide just a high-level summary of what
is prompting the anticipated
savings to be ahead of target that are associated with the
efficiency initiatives? Because I know you said some are revenue generating, some
are cost savings.
Yeah. So
we have been able to realize higher than anticipated savings within the
benefits section. That is also one that we're continuing
to work on through our work with the labor
management collabor--
LMCC, I can never remember exactly what that stands for,
to produce long-term savings. So the things that we've been talking about,
the options that were included in the report that we provided City Council last
year.
Organizational analysis, we've had attrition.
And I think I showed this on this slide.
We have had attrition year to date in the City of Chicago, and every time
that a person ends up separating from the City of Chicago, we do go down
to the entry rate. So you have people we usually see in
June and November of every month, people retire because they've met
their
Their pensionable years of service.
And so,
there'll be budget for people's full salaries for the year.
When we see attrition, we end up going back down to the lower rates, the entry
rate. So that's part of why we're seeing some personnel savings.
And then also we have the hiring freeze in place.
Okay.
That's all I have. Thank you.
Okay. Thank you.
Next we have Alderman Conway,
followed by Alderman Burnett, and that will clear us out of our
first-
Thank you.
I got you all, the people that were here when we started, and then we'll
get to the next list. Conway, then Burnett.
If we go back to slide nine, please.
This is following up on some of Alderman Laspada's questions.
So when I look at the ACFR, it says that our fund
balance at the end of the year was 75.6
million. That has, as I'm sure you're well aware, has really fallen off a cliff in
recent years, gone from 1.3 billion in 2022
to a little over a billion in '23 to 387 million and
now to 75. How does that
comport with the 219 million there?
And
Mr. Belsky, I know you
presented that part of the slide, so I guess I'll direct it to you. But that's...
Okay. Thank you, Alderman. It's a good question.
So what we presented in this slide
is what's called a budgetary basis or cash basis of accounting.
When we present the ACFR, that's done according to generally
accepted accounting principles, which are set by
GASB, and typically the difference
is
how you book transactions. So, we use
accrual accounting or modified accrual accounting, and what that says is that
you
book a liability
when it's known-
Mm-hmm
... in the year it's known, even though cash might
be paid at a later period. And this is a way
you're just trying to get at accuracy, right?
So that 76 million
includes the GAAP result. And so
in the GAAP result, we include the 219 million, but we
also have things that deduct from that, which were,
I would say, in
effect, investments. So we did make, last year,
out of our prior year surplus, the
supplemental pension payment of 228
million. Another big driver is that we made the retro
payment to firefighters. That was a liability that was
determined and known in 2025, even though we're paying it
out in '26. And point of fact is we borrowed for it,
and we're paying it off over time. So the cash flow
is very different from what's recorded in the book, so that's why you'll have a
different result. So the 76 million
you're talking about is the
total fund balance.
Mm-hmm.
And that's composed of
inventories,
an assignment of the rainy day fund,
and
open encumbrances, which are monies set aside this year to
cover future expenses that
are still outstanding. That's only four million.
So the total fund balance amounts to, when you take those
numbers into account, 76.
So wait, does that 219 then not include...
How is that relevant to the advanced pension payment and the retro payments, that
piece of it?
That's in addition to it, right? So that was the ending cash
balance, the cash result. But then you also have to
account for these other things based on when they
occur, right? So the end of the year,
the difference between the revenues
from last year to this year, they were up
$219 million,
right?
Yeah.
That's
in your GAAP results, it's included, but then you also have to
account for things like the retro payment, the use of last
year's surplus for the advance or the
supplemental payment. And again,
it's a matter of timing. So the
reality is cash. Cash is king.
Mm-hmm.
But accounting-wise, in order to have an accurate
reflection of the financial condition of the city at
that point in time, you have to account for these other things
as they occur.
Well, and I'm
probably out over my skis arguing accounting with you, but it seems like we should
be
recognizing our liabilities as we accrue them as
opposed to just when we pay them here.
So it seems like the 75 million is perhaps a more accurate number
than the 219.
They're measuring two different things.
So the revenue,
according to GASB, is recognized in 2026, while the expenditure is recognized in
2025. Again, the ACFR is a snapshot in time.
So if you were to do that snapshot right now, again-
Mm-hmm
... using the same principles, it would look differently.
I'd also like to say that you mentioned the 1.3 billion in
2023 and another number in 2024. As a reminder,
those numbers were dramatically increased because of the COVID dollars that the
city received, and they were specifically
identified to pay for the supplemental pension payment.
So the trajectory downward was known and expected and
anticipated because every year we used that funding that was
built in one to two years to make those supplemental pension
payments. So there was a natural decline that was anticipated in the
fund balance.
Yeah, but not all the way down to 75 million.
I can't imagine you thought the decline was going to go that low.
So again, the revenue for the expenditure that
lowers the fund balance at the snapshot in time sits
in 2026. The expenditure was moved back to 2025.
Well, it seems like the 219 is kind of hiding the ball,
considering the ACFR noting all our accruals is only $75 million.
I don't think it is. I think it's important to note, and every year we should look
for results like this. We should look for
surpluses in our general fund because it helps to build the reserve balance
year over year, which is why one of the things that we are highlighting in 2026
is the need to ensure that we end the year in balance or in a surplus.
Right now, we're forecasting a gap.
Well, I hope so. Obviously, every year of this mayor's tenure, the fund
balance has gone down significantly
by a total of $1.2 billion, but I hope that that changes over the
course of-
To pay for the supplemental pension payment.
So,
now
moving on to the pension gains, and I guess this one goes to Mr.
Marr,
which is the bottom half of that slide.
Does that
include
the police and fire
sweetener bill that was passed last July by Springfield?
Yes. Yes, it does. The actuary evaluations
account for public Act 104-0065,
which impacted police and fire.
Are you sure?
I have to ask that again, noting that
I had calculated that increased our unfunded pension liability by $4 billion.
I think the former CFO said $11 billion.
That's right. So there's a page in the
city's ACFR.
Yeah.
It's
labeled Changes in Net Pension Liability.
It describes the four funds and then an aggregate of the four
funds.
One of the reasons that the funded ratios went up as
significantly as they did, as I mentioned earlier, was due to really
strong investment returns. Just-
Okay
... as a point of reference,
police
market basis investment returns in 2025 were
13.85%, fire was
12.24, muni was 12.2,
and labor was 12.79.
So I just want to confirm that so the police and fire sweetener,
those numbers are included on that-
That is correct
... slide for the PBF.
That's correct. And on the page in the cities ACFR that I referenced,
there's also a paragraph about that legislative change being accounted for.
Great. Okay. Yeah. I've actually sat down and read the ACFR, but I seem to have
missed that part. If I could just ask one more question,
and then I won't. All right. I'll get right to it.
I saw in the ACFR that it looked like our general
obligation debt was $5.3 billion.
I hear you said next to somebody else, you said it was $5.8
billion today. If you could just reconcile that.
Without knowing the very specific differences, I can tell you we
borrowed
GO bonds earlier this year.
Okay.
So the ACFR doesn't account for a GO borrowing that would've taken place earlier
this year. That's the driver.
I figured it was. Mr. Chairman, thank you for
indulging me.
Thank you.
And thank you all for being here today.
Alderman Burnett.
Thank you very much, and thank you for
the acting CFO, the budget commissioner.
Appreciate the work and for being here today.
Comptroller Abelsky as well. And
the benefit of being last is that a lot of my questions have been answered, so
hopefully this is a easier line of questioning.
But just to confirm about the
sister agencies, have we come to any agreement, or are we in the process of coming
to an agreement about establishing a consistent basis on
which the employees have to follow a similar line of repayment as city
employees? Is that in the works or is that something still being considered or not?
So you're asking have we entered into IGAs with sister agencies around debt owed
to the city?
Mm-hmm.
We have not at this point.
I think we've disabused
the notion that we're not sitting on our hands.
We have a pretty rigorous process with the sister agencies, where three
times a year,
they're getting the debt of their employees,
and then their employees are notified.
They're expected to either go on a payment plan or they move
towards judgment.
The
difference is that they don't do a pre-employment debt
check, and that's what we do.
I would like to see us move towards that and entering into
IGAs with each of them to get cooperation.
I think that would improve our debt collection.
So it's something we're looking at, for sure.
Got you. So you're a bit insinuating that a lot of the trouble
is that they hire folks who already have city debt, and there isn't a
plan in place to kind of get them to remedy that course of action?
So they
might hire people that do have debt.
They can't preclude them from being hired for that basis.
But once they're on board,
we do a three, again, three times a year, we notify
those agencies to say that this person they hired, by the way,
has outstanding debt, and they need to pay on it
or,
again, go on a payment program, or we'll move towards a
judgment. And typically, a judgment is wage garnishment.
Awesome. Well, thank you for the clarification.
Well, let's talk about some of the good news.
The online sports wagering, 68% above expectations.
Have we done any analysis on what's driving that?
I know there's a lot of sporting events that are happening this summer
particularly. What I want to see or understand, what would be helpful to
understand is, is this driven by the
amount of events happening this summer?
And is this something that we can foresee as being a
trend that we can count on for the next year?
Or do we see this as a kind of one-off or a seasonal effect in
terms of sports wagering revenue?
I'll turn that to Brian, if you want to talk about it.
Or I can start if you
...
Hi, Brian Carlson,
Tax Division Deputy Director. Thanks for your question.
I know anytime I watch a sporting event on TV,
it seems like two-thirds of the commercials are for betting apps.
So this is a national phenomenon. It's not
really tied to the amount of sporting events going on in
Chicago. The key is that the
wager itself, regardless of the event that's being wagered
on, is placed within the City of Chicago.
And I think the driving factor here is just the appetite for this kind of
thing is
tremendous.
Even more than we thought when this tax was introduced
for the amount of wagering that people in
Chicago like to do.
The tax is based on the adjusted gross
receipts that the platforms get per month.
So that means basically the total amount
wagered less the amount of winnings that they pay out.
So I would expect
what we're seeing
this year to continue as people continue to be interested
in placing these wagers.
Understood. So-
I'd also just say that this is a brand new tax for the City of Chicago.
We based our analysis on the activity at the state
level, but of course, without having data specific to the
number of people who are doing that activity in the City of Chicago, we
were cautious in our first year of analysis and
estimates.
And I appreciate that cautiousness, and just wanted to make sure that it wasn't
because of the World Cup and one-off situations.
Unfortunately-
We'll know more by the end of this year.
We will know more by the end of this year.
It does seem though that it is an unfortunate trend that more people are gambling
and doing sports betting. So it would be awesome to just get the data on
around what those numbers look like, because I can see this being as much of a
public health issue as it is just a revenue generator.
And so I really do care about the issue of just gambling, particularly
for the younger generation, and want to highlight that this seems
both better and worse for the City of Chicago.
Revenue, better. Health-wise, not as good.
And similarly with the social media taxes, that due to just being a
conservative forecast on unprecedented tax,
is that why we are 25% above what is expected?
Yeah. I think, again, new tax, limited data.
It's first of its kind in the world and in the country.
So,
I think that as we see each month how this plays out,
we'll get better at forecasting this particular revenue source.
But, Brian, you can talk a little bit more about what you're seeing month to month
on the social media tax collections.
Sure. Yeah, I would agree that the initial
amounts forecast were on the safe, conservative side.
And what we're seeing on a monthly basis from the companies that are
paying this tax has been pretty consistently around $4
million per month.
So we're not seeing a lot of movement from month to month in what the,
it's about 10 companies that are paying us now, have been remitting.
So I would expect that to continue
based on what the six-month trend has been so far.
Okay. Thank you. And onto the liquor tax.
It's a pretty precipitous ... Oh.
Go ahead.
Yeah. Thank you. Sorry.
You mentioned the platforms that are paying the tax.
Could you, through the chair, submit a list of which ones are and which ones you
see are not paying them?
I'm sorry, could you repeat the question?
Yeah. When you answered my colleague's question, you mentioned that revenue's
based on the platforms that are paying the tax.
So I guess the question I ask or to follow up or maybe to the chair is, are
there platforms that are not paying the tax that we are viewing
as should pay the tax?
Okay. That's a difficult question to answer because there's this
threshold of 100,000 users or more in Chicago
that a platform needs to exceed
in order to be subject to the tax.
So we don't have specifics on the number of
users that each platform that would be considered social media
has in Chicago. And because the tax is so new,
that's going to be a difficult thing to provide for you, Alderman Vasquez.
Okay.
Yep.
Thank you. So next question's on the liquor tax.
It's a precipitous decline. Can we, through the chair, provide the breakdown
between on-premise versus off-premise liquor tax so we can understand where
the gap is falling, where we have a shortfall?
And lastly, my question is around the advertising revenue model.
I understand that there's an RFP out and this is a new revenue source, meaning that
what is existally contracted out isn't something that we have.
What we're looking for isn't in a contractual basis.
But can you talk about how the JC Decaux deal complicates that ability,
and also if that revenue that we received and the new contract signed is
implemented in the budget at this point in time?
Yeah. Thank you for your question.
At a high level, and I'm going to ask Chip Hastings to also address this
question in part, but the JC Decaux contract has line of sight
issues There are certain advertisements that cannot be in the same line of sight as
certain JCDecaux
advertisements. This is a road that we've been down before on similar
projects. But Chip, could you share a little bit of your
insight on this topic?
Sure. Again, for the record, Chip Hastings, Deputy Director
of Financial Policy in the office of the CFO.
There are several aspects to Section 20 in the management ordinance that
sort of limit what
options we have, one of them being existing contracts.
As you mentioned, the street furniture contract
poses some geographic challenges on a somewhat limited basis.
We are not able to
create blind spots for existing advertising at bus stops, whether it's digital
or static, where there are JCDecaux advertising that's currently
present. So at some point, once the RFP is completed and we have
responses, we'll have to work around that.
That's one piece of information that we flushed out via the
RFI that we needed to account for when issuing the RFP.
There are a couple of other agreements,
just as an example, that limit our options moving forward.
There's an existing banner program, I believe that's run through CDOT,
that somewhat complicates our ability to advertise on
lampposts. Not entirely, but that's some language that we had to include that we
have to work around in the RFP as well.
And the second-
Point of information, Alderman
Moore.
Alderman Moore, you have a point?
Yeah. Point of information.
The JCDecaux contract, given everything that you're saying about it,
I've got
some word that that was extended by the city.
Was that extended, and then to how long?
And I'm saying recently extended.
Yes. Again, Chip Hastings. We did enter into an extension agreement with
JCDecaux. I can provide that information through the chair.
I believe it was two or three years,
and we are currently under a contract with them.
We restructured
some of the funding associated with their annual payments, and I believe it runs
through 2030. But
like I said, I'm happy to provide that info through the chair.
All right. Thank you.
The second piece of that question is that from the contract, what I saw is that
there's a lump sum that is paid out in year one.
Is that reflected in this mid-year budget report already?
Yeah. So we work with the CFO's office every year to
understand what the advertising revenue would be or that we can
anticipate from the JCDecaux contract.
But just to be clear-
Oh, that's not in this line. No. So
the traditional advertising line that we have
for our JCDecaux contract is in the budget.
It's not reflected in this particular line. We were very clear.
We wanted to just
delineate that which is normally within our budget, and
the assumptions are based on the work that we do with the CFO's
office versus the new advertising RFI and
RFP contract.
But it is reflected in that 89
million projected gap?
Yes.
Okay. Thank you.
Okay.
All right. We have sort of
Alderman Knutson and Alderman Mosley, who aren't here, made it through.
Those that were here when we started.
I
know. Alderman
Hatton has something that she was trying to get to.
So Alderman Hatton, followed by Alderman Beal.
Thank you, Mr. Chair.
Couple straightforward questions.
One, and
this is about just our special events cost recovery
piece.
Where are we at? We had $0 in cost recovery for
2025. It looks like we're trending that way now.
Yeah.
Are we doing anything differently?
No, we're doing better. So we anticipate those numbers to go up.
There are a number of events that we're still in the midst of billing for,
like Suenos, which is going to be around $2 million.
So we are trending up. Part of the work that we've had to do
is to really get everyone in the same place to
consistently
incur their costs in a way that we can actually see it, so that we can actually
create bills. We're also in the midst of
piloting pre-estimates for
special events so that we can estimate, give event organizers an
understanding of what to expect for the city, so that there's clarity and
alignment. And then pilot out a new billing process so that
we're doing it a lot faster.
Any estimates off the top of your head based on where we're at?
Where we're going to be by the end of this year?
I can follow up with you on that through the chair.
Okay. Thank you for that. And then our
state revenue advances. So
looks like we had some success with LGDF.
Could you talk a little bit about that, and where are we with some of our other
priorities, like
getting the ability to tax services?
Yeah. I think
making sure that we were down there to
have lawmakers understand how important LGDF is.
Our state-funded
revenues are very large, and so any time that those
are messed with, it has tremendous impact on
not only our budget, but other municipalities and other taxing districts.
So being able to beat back the effort to continue to further
Reduce our revenue share and LGDF was important.
Now we want to make sure that we're telling our lawmakers it needs to increase,
right? I think we've put out a calculator, but
also the Chicago Financial Futures Task Force also estimated
that over the course of the time that the state
decreased the percentage share, we've lost out on $12
billion. So getting that back up eventually to 10% is a huge
part of our goals.
The digital ad tax passed
at the state level. The largest generator of that will be in the
city of Chicago. And so we want to make sure, us, along with
other municipalities, want to make sure that we get a cut of that revenue to help
support some of the unfunded mandates.
And I can't remember who asked about the pensions.
Oh, it was Conway asked about the pensions.
The state has put unfunded mandates on the backs of the city of Chicago, so we want
to make sure that we're getting revenues to support that.
We have other priorities related to
our 911 fund and making sure that that is supported because it's
critical. And you see today being one of those efforts because of
what's happening with the Canadian fires and the fact that we have
just terrible
breathable air today because of what's happening across our border.
So we want to make sure that we have the ability to sustain our 911
operations,
especially in light of the fact that we're implementing more technology there.
So
we are in the midst of preparing our
ask for veto session. That will also be a part of our budget
process this year.
And then the service tax?
The sales tax on services?
Yeah.
If they did that tomorrow, that would help everybody, and it would also help them.
That is, I think, a long-term strategy that we have to build
coalitions to make sure that the state actually
achieves. We are one of only 11 states that doesn't have it.
Indiana lawmakers just introduced a bill to do sales tax on
services.
We have the roadmap.
It's a question of political will.
It's a question of
because once it's introduced, there's going to be a whole lot of lobbying of
companies and service industries to exclude themselves from
it. And so I anticipate that being a long process.
And I think it's a conversation we bring up every single year with
our legislators. We need more people to be a part of that conversation and to push
with us.
Thank you for that.
I want to speak to hopes for this budget
process, and I think things that we're all going to need.
I know the tone of our hearing today.
I've heard many colleagues feel like
they're disappointed, they're angry, they're frustrated.
They feel like they haven't seen the actions that they've wanted.
I've heard colleagues
angry and frustrated that folks who kind of
passed the council budget
feel like this is
unreasonable expectations for some of the things that we've
asked you to do.
Somewhere in between these realities is the truth.
We'll just leave it at that.
I'm really hopeful,
one, to be around for this budget process
this year.
And two, to make sure that we
actually can come together and not end up in the same place
we were.
I know we all want the same thing at the highest
level, which is a balanced budget that is not
making it harder for people to live in Chicago.
I know that we have different views on how we
might get there. And I do want to
reflect, though, that as someone with project management experience, and I
know a lot of my colleagues have it,
if we want a new program to exist
and we're not the ones managing the staff
to do the implementation of that program, we can make
a timeframe,
but that timeframe isn't necessarily going to be met.
And this goes to the line of questioning on the augmented reality piece.
Council did say, and I didn't support it, but the
majority of our colleagues did, that they wanted this program to
move forward.
And I want to reflect that what I'm hearing is that there has been
work done to move the program forward, and colleagues are
frustrated that they feel like it wasn't enough or in time.
I know when I tell my staff,
I'm great at project management. I can tell my staff that I want something done by
a certain date, and I can map it out for them how I think they're going to do
it. But ultimately, I have to let them do the work.
And if they come back to me and they say, "Hey, I couldn't do this by this
deadline, and here's why," then I have to roll with that
so that we can keep moving. All that is to say, I know
we've had some communication breakdowns,
and some of our strong emotions have
maybe kept us from between council and budget
and the administration from feeling like we can trust all the info.
As we move forward, know that
I, and I know a lot of my colleagues, we want the same thing.
We want to work on revenue ideas that work.
That means exploring every option
and trusting the information. It's so important that we can trust you
guys
to give us the information. And I know our public servants are
here to do the same thing. And so I encourage
maybe a reset as we go forward. And for a lot of
my colleagues, we got to choose, are we looking to win a
good budget for our constituents, or are we looking to embarrass the mayor?
And you got to pick because you can't do both.
You're not going to be able to embarrass the mayor and score political
points and
pass a good budget that's going to work for Chicago.
And similarly, from the side of the administration,
just because someone's not supporting you, we've got to have the
truth and the honesty and the transparency, and there's just a
deficit on both sides right now. So I look forward to being a
part of working with my colleagues, of working with the
administration, and with you, budget director, on making
sure we can get there. We got to do it differently this year. So thank you.
Thank you, Chair.
Thank you, Alderman. You said hopefully. You plan on going somewhere?
I was just asking. You never know. Okay. All right.
Alderman Beale.
Thank you, Mr. Chairman.
Good afternoon, everyone. I'm going to dig right in.
So the
pension payment that was
made to CPS, that they didn't send back to
the city. Well, they did, but you applied that to '24 and '25,
correct?
The payment was received, and recorded for 2025.
Okay. And so we're not expecting anything for 2026?
At the time that we budgeted and passed the budget, we had not
gotten a confirmation or an agreement with CPS that they would
pay us in '26.
Okay, so the resolution they passed back in October, November,
to reimburse us when they got the
TIF sweep, that was for '25?
That was for '25.
Okay. All right. So are we looking to do the same for
'26? That any TIF money that is sent to them, that they
would
reimburse us?
I think that's a conversation we'd like to have with city council.
Right now, I think I've been asked a couple of times what the TIF surplus is.
It's not what it was for 2025,
and so, I think we have to have a conversation.
CPS has been very clear for the last several years that if they are going to make
this payment, it has to come from money that the city provides to them.
Okay. So in the event that
they don't agree to pay us that money,
would it be the position of the administration not to
surplus the TIF
in order to get that money back?
Can you ask the question again? I'm not sure I follow.
Basically, we're not going to give you anything that we're not going to get back.
First of all, we don't have an IGA in place for '26.
If we were to put an IGA in place, I'm pretty sure that they would insist
that if they make the payment, it comes from money the city provides them.
Okay. All right.
Your number for VGTs, the big goose egg
you put up there, the big zero.
Let me ask you, how come
illegal sweepstakes machine
revenue is not in that number?
So the line item for VGTs is specifically just for VGTs-
Okay, so-
... from an accounting perspective.
So we've received about probably close to a million dollars now on
illegal sweepstakes machines.
That's not reflected in any of the presentation, correct?
It's within the
budget. So if we were to look at fees
as a whole, as a total category, it's reflected in that.
But we were reflecting specific assumptions about
specific revenues that have not been achieved thus far.
Okay. All right. Last time you were here, I asked you a question about whose
responsibility it was to notify the state that the city
had passed
VGTs. Did we ever find out who's responsible for notifying the state?
I'm not the Department of Law or the city clerk's office, so I don't
have that information.
We do have a member of the
Department of Law standing right behind you that can answer that question. Right?
Okay. Can somebody answer that question for me?
Good afternoon. Ray Phillips, Santos on behalf of the City of Chicago.
The state law is silent as to that.
Say that again.
The state law is silent as to that.
Silence to that?
Silent as to that. Sorry.
What does that mean?
In other words, the state law does not state
who is supposed to alert somebody about...
So let me ask you. So if
this initiative was supported by the mayor, who would've sent the letter?
My understanding
is that
the state law does not say that a letter is necessary.
Okay. So the state did not recognize
that the city was open for VGTs until this body notified the
state. So if it's the responsibility of the executive
branch to notify the state, why didn't we?
I'm not sure it's true to say that the state didn't know.
If I'm hearing my colleague from the Department of Law
correctly, state law does not clearly state whose responsibility
it is to notify the state.
Okay, so since the state is not clear, so we're just
not going to notify them?
Can I ask a question of the Department of Law?
Do you know if the state law requires notification at all?
I don't remember
that it does.
I can get back to you in a couple of minutes on that, I think.
Or potentially through the chair.
All right. Well, that's a question I've asked several times, and it's amazing that
four or five months later, we still
can't answer that question. And I've asked point blank whose
responsibility it was and so-
But I think, Alderman, the state is processing licenses, so
they're aware and they're pro-
They're processing licenses, but you guys stonewalled the process, didn't notify
the state. We had to notify the state. It could've been streamlined.
And it just goes to the point that what everybody in this body is saying, that you
guys are stonewalling the parts of this budget that you all don't
like and that you all don't support.
And that
is not right, it's not fair.
You have a responsibility as the executive branch
to
fulfill the obligation of the budget that was passed, whether you like it or not.
You can't pick and choose, which one you like, which one you don't.
And it's obvious what's happening here. Ray Charles can see this.
And so it's unfortunate, but that's why we're here.
So let's just move on,
because we're not going to get any answers to that.
So,
if we make the pension... Let me just get back to the pension payment,
the advanced pension payment.
That number's not reflected in your deficit number here, is it?
The deficit number is reflective of the city making the pension payment.
Okay. So,
but you say you're not making it yet.
To be clear, what has been stated is that we are
making an analysis of timing of the payment because of
other factors, including that the city will likely make
advance payments to the pension funds over the next several months
because of the property tax delays, which puts pressure on our cash
balance.
Mm-hmm.
Therefore, deciding when to make another $110
million payment in light of also making advance payments to the
tunes of hundreds of millions of dollars to stave off the pension
funds having to liquidate assets, it's a question about timing and cash
flow.
Okay. All right. So let me ask you another question.
The
positions in the budget that are vacant,
that are revenue-generating positions,
how come those positions are not a priority to fill?
They are a priority, and departments are
recruiting and hiring for those positions.
Okay. And were they directed early on, or is
this mid-year?
There was no hiring freeze on revenue-generating positions.
Okay.
All right. So you do agree that there's a lot of positions right now that are
vacant that are revenue-generating positions?
I couldn't say one way or the other.
What I could say is that the city naturally goes through attrition.
Okay.
All right. Well, let me just say, right now I see that we have
in the Department of Finance, you have nine out of 11
auditors that are vacant. One,
another vacant position in Department of Financing,
auditor two and auditor three, that position is vacant.
In ZDPH, you have two out of two auditors, four positions that
are vacant, 14 out of
44 positions in ZDPH that are
vacant. One out of 10 clinical
therapists, two out of 29 clinical therapists
out of DFSS, three out of four auditor positions.
The list just goes on and on. We have a lot of positions that are vacant that could
be possibly bringing revenue into the City of Chicago,
and I think those positions should be of the highest priority knowing that we
have a budget deficit. So let me ask you, what is the total
projected deficit you see right now going into next year?
For 2027?
Yes.
I don't have that number for you. We're working on that right now.
All right. Can you give me a ballpark?
I'd rather not give you a ballpark because a report that we put out in
a month could be very different. I think that what I will say is
this budget that passed has a number of structural solutions
in it, which will help reduce the budgetary deficit that was
forecasted for '27 last year.
Okay.
Getting back to VGTs real quick. Now, you guys have had
seven months to come up with a
process to accept video gaming terminals in the City of Chicago.
The state has already done it. The state has approved, I think, six,
and there's about another two dozen that are looking to be approved
in September, I think it is. How is it that knowing that this
was coming, that we don't have the process in place to just flip a switch
and just start accepting those applications and get them out the door?
The state has been reviewing VGT licenses for
decades. The city has not. The VGT ordinance
that was passed was passed in December of last year,
and there was no conversation with BACP as to what was
needed or how to implement. They also were not given any
additional personnel to implement.
I think what we do anytime that we have something that's new, it
takes time to determine how to implement something that doesn't exist and has
never existed in the City of Chicago.
Hmm. But it exists in other municipalities throughout the state.
And we just can't find ourself out the
closet when you look at other municipalities that are doing
this, and we can't call and say, "Hey, what are you guys doing?" And kind of copy
what they're doing?
I'm sure that they did. Other municipalities also have limitations
on what businesses
they license for VGTs, even after the state has licensed
them. Every city is different in how they implement, and I think
that the City of Chicago is also different.
So I can't speak to the process that BACP went through, but I can
tell you that they are currently processing applications that the state
has approved.
Okay. They're also trying to repeal them out of the department as well.
So what makes us think that you guys are going to implement a
process when you're actively trying to repeal it?
What I can tell you is that BACP is actively reviewing the licenses
that have been approved by the state.
Would you like a round two, sir? Are you good?
Round two, round three, round about two.
I just want to respond to one of your questions-
Sure
... about revenue producing positions.
So
in the past, we've had about 13 vacancies in the tax
auditor positions. Those are ones where for every dollar, they
collect five.
We upgraded the titles because that was one of the problems with
recruitment.
We filled seven of those.
We've added 10 total, but four
are gone due to retirement attrition, where we're continuing
to interview to fully staff those.
But even at this level, we're up 14.5 million
in the first five months relative to 2026.
With the additional 25 parking enforcement officer or
aides you gave us, that's fully staffed at this
point.
Thank you. All right. We've got a point of information from Alderman Burnett,
followed by Alderman Vasquez or Cesar Lopez.
If you get to your chair in time, you can go next. Okay.
All right.
Go ahead, Alderman Burnett.
If in a percentage basis of the amount
of VGTs that have been approved, what is that in contrast to
how many we said are needed to be approved?
The $6.8 million assumption is based on
3,300 licenses being approved in 2026 by the city
and the state.
How many has the state approved so far?
Five.
Okay. Thank you.
Alderman Vasquez, followed by Cesar Lopez.
Thank you, Mr. Chairman. I will be needing a round two.
First question I've got is, figured I'd ask right now at the top, about
time.
The social media tax revenues, which I appreciate are
performing better than expected, my understanding is that money wasn't going to be
used towards anything because there might be a lawsuit.
So is that being factored into the deficit or not?
How's that
balance out?
No, it's not factored into the deficit.
So it's going to completely different-
Okay. You're just letting us know how it's performing, but it's not going to be put
towards anything.
Right. Well, the reason why we note that it's performing is, one, to
highlight that it is a structural revenue and
we believe it's sustainable because we believe that we will prevail in that
lawsuit. It's also
one that as we begin to use the funding, we'll
take things that are currently on the corporate fund and be able to move them
into that fund, because right now, behavioral health and mental health is
completely, if it's not funded by grants, it's funded by the corporate fund.
So being able to find sustainable revenues actually does help the corporate fund.
Yeah.
To be completely clear, I'm pro that working out.
The concern about the lawsuit pending is kind of where I'm at, where if you, for
example, start spending the money there, and then later on you get sued for it, and
then you have to come back and try to figure out the money, that's a scary
situation.
Yep.
So it's kind of general understanding. Okay.
You mentioned kind of on the expense side that everything seemed to
be within budget. We are saving funds.
Is that every single department or is that an aggregate?
It's every single department is within budget.
He's not here anymore, but Alderman Martin asked for where we were on our
expenditures thus far. So through May, because that's what this report is
reflecting, only 37% of our expenditures on the corporate
fund have been spent. So five months of the year, we're
still trending less than what we normally would see at that point of the year.
Okay. Thank you. I
feel like Columbo when I'm asking these questions.
So
given the projections, there's a talk of a deficit of
130 million. I have that correct?
No. The 130 million refers to the negative variance on
revenues. However, we are anticipating just,
again, this is very preliminary. We'll have a much better review by August.
We are anticipating savings on the expenditure side, so they do mitigate against
the negative revenue variance.
What would that leave us some level of anticipated-
Yeah
... or projected?
Yeah. Around $89.3 million. Again,
we're launching the budget process
right now, and we're working with departments on their end-of-year expenditures as
well. So we do anticipate that 33 million will go up.
We've actually done really well over the last two years on expenditures in coming
in well below budget. So again, that's a very preliminary figure.
We'll have a much better figure by-
Totally
... by August.
And so given what could be some range of deficit,
how
do you all plan on covering that? Is it looking
at moving forward with layoffs,
slowing down or stopping further hiring, or is it trying to not
make the advanced pension payment at all, or full payment?
I imagine, unless I'm seeing something different, those are your three categories
of what you're able to do if you see that hole.
As that hole is there, what do you anticipate picking out of the multiple choices
there?
We are continuing to analyze. I know that you don't like that
answer.
No, I like analysis.
But we want to be thoughtful. We want to talk to members of city council
as well about appetite around some of those options,
which we anticipate doing over the next several weeks,
to come up with a plan that we can put in front of both the mayor and city council.
Sure. Yeah.
We do believe that there is a way to solve the issue.
Some of them are harder and probably less
appetizing.
Yeah. I
would imagine zero are palatable, right?
If you're talking to us, none of us want to make those decisions.
They're difficult ones. But in budgets past where we always have
similar difficult decisions, the administration does propose something
first for the conversation. So to what you're saying is more
analysis, and then we'll figure out which one out of all not good options.
Yeah. We don't anticipate taking long
Okay.
There was mentioned that currently there are five gaming licenses
that were approved at the state that came to the city and BACP is reviewing.
What is that process? How long does it take?
I imagine those folks are like, "Great. The state approved it.
When do we get the ball rolling?" And are there models that we're looking at to
expedite those processes?
I can't speak for BACP. I can definitely get you that
information.
Five licenses is not a lot to have to review, so I can't imagine
it being a-
I guess to that point, when were they approved at the state level?
Recently.
How recent we talking?
I don't know off the top of my head. They literally
just approved them, so I can get you the exact date.
Yeah.
Because like I said, I think what was helpful and what I appreciate about having
the midyear budget hearings, so glad that we changed legislation to actually create
this, is that members are being more informed.
So even the questions about procurement, how we can improve the process, I think
are important regardless of what side somebody's on in the whole equation.
And so similarly, looking at the processes and
bettering and streamlining government to get results quicker, I think is in the
interest of everybody, regardless of what side
people feel they are in the budget. Okay.
Per a WTTW article recently published, the city spent $259 million
to resolve police misconduct lawsuits in 2025.
Is this something you're in agreement with?
And if you're not, can you explain what difference you're seeing?
In the number?
Yeah.
The number is probably taken from the ACFR.
So if that's the number, I can't speak to that particular article because I haven't
read it, but if it's the number from the ACFR, it's probably accurate.
Okay. And so how much was budgeted for police misconduct settlements in that
budget?
In '25, I think it was $90 million.
So you're talking about 160-
Mm-hmm
... that's spent above that.
So is the projection that we're then borrowing another 160 million to
cover it?
Yeah. So City Council approved $289
million of borrowing for S&J. Yeah.
Okay.
And please don't quote me on that exact number.
Yeah.
But I think it's around that number.
So I got a question about the encumbrances, which the
ward offices love to hear about. So,
if we've got encumbrances by department and by the ward offices,
can you detail exactly where the money will be going per department, since they'll
be unspent where they've been
appropriated?
You mean the savings-
Yeah
... by departments?
Yeah.
Basically, we get budgeted for money.
We get told we can't spend certain money, so where's that money going to at the end
of the year?
You're talking about your ward office
encumbrance or departmental encumber? So two very different concepts.
So I appreciate that.
Yeah.
And because the time is up, an explanation on either or, and I got the round two,
so we'll be back.
Sure. So the encumbrance that you see in your ward
office and your committees is very different from the concept of encumbrances for
departments. So because of how we budget
city council, which is like you're sort of all one budget,
unlike departments where they're in their own cost centers, you guys are sort of
all in one cost center. So the concept of turnover and the
concept of
being able to encumber to lower your budgets is very different.
So the way that we enacted that is separate than the way we do it in
departments. We add turnover to departmental budgets to
reflect the amount of time that we think positions will be vacant,
and attrition that happens. We aren't able to do that on city council budgets
because you're all sort of lumped together.
And so the way that we did the ward and committee
savings that were put in this budget is through encumbering dollars to lower your
budget. So, it looks like turnover, but it's really just a savings
line that lowers your budget for the year based on the amount that was
confirmed. For departments, when we talk about encumbrances, what that
means is that they have entered dollar amounts into the
financial system to cover obligations that they
anticipate having to cover in contracts,
in delegate agency agreements, and so forth.
So while they don't spend it all at one time, they lock in the
monies because they know it'll have to be spent over time.
A lot of times they lock in more money than they need, and by the end of the year,
we are releasing those encumbrances, because a new budget is now in place that
you've appropriated.
So,
thank you for the context. Appreciate it.
You got a round two, right?
Sorry, yeah. Will do.
Okay.
See you then.
All right. No problem. Alderman Cesar Lopez.
Thank you, Chairman, and thank you
to the budget directors here for, and Comptroller for being with us.
I'm glad that I got today a copy of The Onion today because
honestly, this should be a headline for The Onion.
I cannot believe
that now after some city council
members proposed this budget,
that we have the audacity to be blaming the
administration for the utterly failure of
balancing the budget.
$130 million
of the budget short of the projected revenue.
And this goes to Michael Sacks, and I want to talk to him directly because he's
the architect of this mess.
This is a major failure. This is equivalent of 2,000
city jobs. That is the shortfall. It's
embarrassing to project 3,300
VGTs to have five licensing.
This is a shame, and I think this is going back, and Chicagoans should be
p****d off about what we're seeing today. I don't care who is mad about this.
Chicagoans would be mad and should be angry about the
irresponsibility of this because I don't think that we should go in through
conspiracies or how we didn't get these budget
projections, because this was discussed in several occasions, the concerns
of implementation. So with that, let me ask, maybe
Steven, you can walk me through these three supplementary memos, because I think
the three memos that you have, I think will illuminate
what is factual and what is fictional here.
Because I'm tired of the smoking mirrors, and they're not owning.
At least when I was a little kid, I was told to own my mistakes.
And now some people here owe an apology to Chicagoans for
proposing such a shameful short budget that is not balanced.
So if you can walk us through these memos and what was
the work that the administration did to attempt to meet the revenue
goals proposed by the body that I'm sitting on,
not by the mayor's office.
And
specifically on the revenue goals for the advertising
program,
the municipal marketing program, and creating a
new augmented reality program. Can you walk us through that?
What were the attempts? Because it's important to this.
I want to distinguish facts from the fiction.
Yes. So thank you for your question.
Each of these three memos is structured similarly.
There's a background, a current status update, a
timeline walking folks through what actions were taken over the first two quarters
of 2026,
our expectations for the second half of 2026, and then a
brief summary.
A couple of things to note.
Each of these projects or initiatives lacked
some precedent.
Each of these projects or initiatives went through either an RFI
or an RFP process. Let's take each of them individually.
The debt sale. We contemplated doing an RFI,
elected not to, went straight into an RFP process, given some of the timing
considerations that this body was concerned about.
For augmented reality, we issued an RFI on February 10th,
35, 40 days after the start of the new year.
That RFI received no responses. It was
reissued.
It received two responses after the reissuance,
and we are working through the process now of issuing an RFP in
collaboration with the Department of Procurement Services and
others. When it comes to
advertising and marketing,
given the scope and interdepartmental coordination that was required, we spent the
first couple of months of 2026
talking internally about the various different asset categories that City Council
asked us to review. We issued an RFI. We got a handful of responses.
We're now moving on to the RFP stage.
In each of these projects, a lot of internal coordination has gone
on. We have moved them forward
purposely and intentionally.
And the other thing I would say that's in common across all three of these
is that we have not received many responses.
Two for augmented reality, two for the debt sale, and
five, but not quite five because a couple of respondents
were only partial responses to advertising and marketing.
Which to me suggests that there's either a lack
of interest,
a lack of, in the case of the debt sale, confidence that it can be
executed, or in the case, for example, of augmented reality, just the
sheer newness of it. I appreciated Alder Nugent's comment, and we've been trying
as an administration to focus on new revenue sources where there are emerging
markets,
where either new technologies are available or new revenues are flowing in
that direction. But in each of these three cases, they were introduced very
late in the process, but we've been working extremely
diligently to move each of them forward.
Thank you. My next question is, how many meetings did your team have with
departments to coordinate these programs and
stand up to these RFPs and RFIs? Usually, how many do you
get and how many in comparison you got for these ones?
So,
I'll respond with kind of two key points.
Let me just focus on the debt sale, because I think that's a good example.
We met weekly starting in January and have met either weekly
or multiple times a week on the debt sale internally between
colleagues in OBM, DOF, the CFO's office, and the Department of Law.
So more than 20 or 25 meetings have been conducted
internally to move that project forward.
When it comes to the RFP itself, and I think the debt sale is another
good example, because we asked similar partners to respond
to that RFP. We received 2 responses out of
20 that it was sent to directly and downloaded more than 50
times. This is outlined in the memo on our investor relations website.
For the sake of comparison, when the city did a bond underwriting RFP
also targeting investment banks this time last year, we
received more than 40 responses.
So it's two responses for the debt sale, 40 responses for our
bond underwriting RFQ.
Thank you. Look, and I'm going to probably need round two, because I think it's
good that we talk about fiscal responsibility here, because I want to
know also, we're going to zero in on this
municipal marketing program, for instance.
I know that
projected $29 million, we got $6 million, right,
in return.
What would you say about the
attempts versus the reality of it, right?
I think
in all of it, I won't request round two, but I heard a
lot in this council talked about that the
administration did not do the due diligence.
But what I'm hearing here is that they were following the due
process, that you have attempted, you have the meetings, you have
your process. But
comparison to what usually is the due process, the interest in
these RFPs or RFI,
it is a huge discrepancy here. And again, I want to make sure that the
public, I'm talking to Chicagoans here, because clearly this is all messed
up. And Chicagoans, I hope that they remember who voted for this mess.
2,000 city jobs equivalent, that is the shortfall of this revenue
projection. Irresponsible. But I want to make sure that we respond to
these allegations, somehow the conspiracy is that
the administration is not doing everything, but we've got to follow the due
process, obviously. So what
will you
say is the rationale or the reason for the
low interest in these RFIs? And I will get to round two.
Thank you.
I think the answer is slightly different for each of the three.
And let me also just say that at the outset of these processes, we
didn't know precisely what kind of responses we would
get. We were cautiously optimistic, I think, like we always are, when
at least my team issues RFPs or RFIs.
When it comes to the debt sale,
I think one of the primary concerns that institutions
have is ability to actually execute the
transaction. There is, again, no precedent.
No local government in the United States, to the best of our knowledge, has
executed a debt sale of unsecured, uncollected, past-due
receivables.
That is feedback that we got in the RFP responses.
It's also the feedback that we got from those folks that did not respond, but were
sharing with us what little insight they could provide and elected to not
respond.
So execution on the debt sale. When it comes
to augmented reality,
similarly, lack of precedent,
but also fewer firms that may be interested in
pursuing that as a concept.
On the debt sale,
we focused on investment banks, many of which we work with in other
contexts.
On the augmented reality,
not fully understanding what the landscape of that might look like
because it is not done elsewhere.
I would personally say cautiously optimistic that we would receive more than two
responses, but alas, we received two responses.
It's a small market, but it is
one that we are interested in because it's a growing market.
When it comes to advertising and
marketing,
as I mentioned earlier, the city has a successful contract
with JCDecaux.
The asset categories that are being focused on that are
outlined in the management ordinance are lampposts, bridge
houses,
parking meters, and large city-owned vehicles.
These are important asset categories, but require a tremendous
amount of internal coordination.
Importantly, not all vendors may be interested
in executing a program for each of those four or multiple
asset categories. You may have a vendor that may only be interested in
large city-owned vehicles. You may have a vendor that may be interested in another
asset category. So there's a different story for each of them.
I think the commonality is
the projections that were made as part of the budget last year were
done without the insight of the CFO team, the
DOF team, or the OBM team. And had there been more cooperation,
we might have been able to find a better resolution and ultimately
move forward more quickly on these projects and move forward with better insight.
Thank you. And round two, Chairman. I appreciate it.
Okay, we got you down for round two. Okay.
So
for individuals I have down for round two, I have Chair
Dow,
Chair Cito Lopez. Alderman Vasquez, you want a round
two? All right. Okay. This is a first.
Okay. I thought you took lunch already. Okay.
All right. Anybody else for round two?
I thought you were about to ask if anybody else wants lunch.
Nah, that's a
on your own. That's one of those days.
All right.
Chairman?
I got you.
Sorry. Okay. Thank you.
I put a note in. Yeah, you didn't respond to my note. Okay. All right.
Oh, sorry. Didn't see it.
So we're going to have Alderman
Mosley, followed by Vice Chair Lee,
after which we will go into round two, which I have Alders Vasquez,
Dow, Quinn, and Cito Lopez.
And LaSpada. Okay. No problem.
Okay. All right. Very well. Alderman Mosley.
Thank you, Chair, and thank you to our finance team here.
I want to ask, when we talk about the declines in the governmental
revenues, what's the first priority? Is it to replace those?
And how do some of our basic and bulk city
services get prioritized in that, particularly
police, fire, and especially streets and
sanitation?
Great question. Thank you, Alderman Mosley.
So what we're seeing in the decline in intergovernmental revenues, again,
part of that is PPRT, though we think it'll stabilize by the end of this year.
We get those in large chunks throughout the year.
The other part is state income tax.
So we know that there was going to be
some impact from the Big Beautiful Bill on the amount of
corporate income tax that municipalities and states were going to
receive because they got large tax breaks.
The state, in their budget this year, did try to close some
loopholes, try to equalize the rate at which different types of
corporations were paying into
state income tax. So we do think that what they did will have some impact to
try to stabilize and mitigate against what the federal government did.
I think one of the things that we have to continually advocate for is our fair
share of those revenue streams, PPRT being one of them.
They continually divert Um, that revenue from
municipalities when the purpose of that revenue is actually to go
back to municipalities. It is a replacement tax for what we used to
be able to levy on our own. And I raise that point
because if you look at
the revenues in the monthly revenue report that I provide every month, as
well as on the screen, what we control, we're doing very well in
and we over-perform in when it comes to tax revenue.
And so when you think about a tax that the state took over to
essentially make the rate consistent across the entire state, we
need to ensure that they're giving us our fair revenue share and not diverting it
for their own purposes, which is what's been happening over the last several years.
LGDF is another example of that. We need to continue to advocate to increase that,
because they have increased the income tax rate, but the
only people who are seeing the upside of that is the state, not the municipalities.
I think that we continually need to advocate for more
revenue at the state level.
We saw them pass some pretty progressive revenues this year.
And we want to continue to advocate to get a fair share of that because, again, the
largest economic driver in the state is Chicago.
So what they're depending upon is activity that's happening in the
jurisdiction in which you guys are responsible for.
We
have veto session as part of the end of this year, which we will continue
to work with our
partners downstate as well as with city council on ideas that
we want to continue to bring forth.
And I get that, but I want us to-- When we talk about what's in our jurisdiction,
what we can control, controlling the controllables.
As we pursue new progressive revenues, want
to make sure that we have our priorities in-house.
We had this conversation a bit last year and the year before as ARPA dollars
were expiring and so forth. We sought to continue some of those
programs. And I just want to make sure that as
we are strapped for revenue sources and go out and pursue new ones,
bringing ones in that we get to control, that we are making
sure that streets and sands, police and fire,
are as stable as they can be. I don't know if they can sustain any
more cuts, and I know we generally say across the board everyone needs to
cut, but we're having issues with garbage getting picked up,
with trees being trimmed and removed, with police response
time. God forbid, if we have a delay
in fire response. Those are our bare
necessities that we have to really have strong safeguards to.
When we talk about property tax sales, yes,
Mr. Holtkamp and the team has been doing a great job.
We've seen some impact of effectiveness around responses.
But how do we stop these bad actors at the source?
And this may be more so a policy question, but I'm hoping that we are having
conversations with the county about how they're going about these property
tax sales that allow for this proliferation of
a small amount of individuals and companies to amass
this much of city properties that they are not maintaining, that then the city
is spending time, effort, resources, dollars on to do so.
And similarly, in that same vein, this late
property tax payment situation that has gone on for over five
years, and impacts even some of the
ancillary things that we have, like special service areas.
On slide six, I'm wondering, particularly as we
come back in a little bit of time, can we add another column
that gives the projected revenue?
I know there's RFIs and RFPs and things that are
out. Knowing a timeline in which we expect
those things to be enacted from that point to the end of the year, can we
say this is what we expect
will come from that?
Sure. I think part of that will be in the
forecast that is released next month.
But until the RFPs are out and until we get responses back to
an RFP, it's zero dollars, right?
And I think that
I want to go on the record to say that,
Steven mentioned this earlier,
augmented reality advertising revenue.
We want to go where the markets are, right? Augmented reality is a market.
We saw Pokemon Go occur in the city, and we did receive revenue from that,
right? Amusement tax. So the city, for things that
happen like that, we do have revenue that we receive.
The question is putting a city publicly
owned program in place where we're the ones who
license out the ability for augmented reality to happen on our assets is a
very different item. We believe that we need to do that.
The question is, what does it take to put that type of infrastructure in place?
How long does it take, and when do you start seeing revenue?
So until the building blocks of these types
of programs are put in place and you start having a
partner who is producing these things for the city,
it's zero dollars. And so today, if you were to ask me how much we're
going to get, it's zero dollars until those building blocks are in place.
Understood.
Forecasting pensions. Will we see the pensions forecasted out in
different scenarios that you all have discussed, particularly if you're looking to
split payments even more?
Yeah. So we just received the actuarial
reports from all the four pension funds, and I believe those also go to the
finance chair.
For 2027, we are finalizing that number as well as the
number for the supplemental payment. That'll also be in the forecast.
So we
include it in our forecast. So it's part of the gap that we'll have to close for
2027.
Have to sign up for round two. I have three more questions, so
Two. I think Alderman Lee is next. And Alderman
Lee
Hello. Hello everybody. Sorry I'm not in the room with you
guys. A lot of the questions I had were already asked, but I do
have a couple.
Chairman, how much time do I have?
Seven minutes. That's all I need to know, because I can't see the clock from where
in the virtual.
Okay.
Seven
minutes. Let's talk about
efficiency. I know the transmittal letters that sent out had
several areas that we're tracking at or ahead of target across
most work streams.
And I talk to a-
Alderman Lee, you're going in and out.
Could you get closer maybe to the mic on your phone?
Just in a big room.
Chairman, why don't you go ahead and go to the next person.
I'm going to try to find a quieter place.
Okay.
Thank you.
I'll be back.
All right. So we're now into our round two, folks. Chairman Dowell.
Thank you, Madam Chair.
I guess the first thing I want to say is that
everyone around here
wants to have fiscal responsibility.
And
I don't think it's black and white, that everyone
has
an opinion, but there's also facts, and
we have to figure out how to work together in the best
interest of the City of Chicago. So I want to put that out
there. I do want to acknowledge my
colleagues who, since February,
had conversations at the state level, meeting with
lawmakers, meeting with the governor's office, to get
that $12 million back in the LDGF. So
it's not
just about the administration
doing the work. We are co-equal branches of government,
and we have to work together.
We spent a lot of time
defeating
House Bill 4171, which was a sports wagering
bill that would have denied the city the ability
to do our own thing.
So,
we killed that bill, and that was a $26 million
hole, potentially, for the city's
current budget. And so I think that information needs to
be public,
that
we're not sitting on our hands. Right?
And I just wanted
my colleagues to know that.
I have some questions.
Budget Director, I've gotten a couple
of inquiries from city employees who've
asked whether or not there was an interest this
year in doing a buyout of employees.
I think one was done in 2003 and
2004 as a way to help balance our budget.
We haven't looked into... Are you talking about a pension buyout?
Mm-hmm.
We haven't looked into that as an option.
We can take that back and look at what the cost of that would-- I'm sorry, are
you talking about early retirement?
Yes.
We haven't looked at that. But we can take that back and start to analyze.
Okay.
The other thing I want to ask is, I know you said that the TIF
balances, the uncommitted balances, you won't have that until September,
but I would like to see if you can, through the chair, give me a
sense of what that number is today.
We're actually planning to release the second quarter TIF
forecast report at the end of this month, which will reflect the,
at this point in time, the TIF balances of every TIF district.
And so I would respectfully ask if we could publish it
then, because that's when the information will be final.
We're still working through the revenue numbers that we just got from the
Cook County
Clerk's office,
which actually informs the balances as of this point in the
year.
Okay. And just an aside, I have some
SSAs in my community.
Did they receive their
payment from the TIF surplus that we did for this
year?
So I can tell you what the city has done, and I can tell you who's
responsible for paying them. So the city every year
calculates the TIF surplus twice, and we distribute the TIF
surplus twice. Once in February and once in
June, per state statute.
We send the money to the Cook County Treasurer's office, and it's their
responsibility to turn around and actually distribute that in accordance with
the percentages. We have heard from SSAs
that despite the city having given
the money to the Cook County Treasurer's office, that the treasurer had not paid
them yet.
And whenever we hear that, we do call the treasurer and ask why those distributions
haven't been made despite us having done it.
In particular, it took the County Treasurer's office
more than a week to pay CPS, even though we had sent the money on
June 30th. So,
even though it's not our responsibility to turn around and make the distribution
directly to the taxing districts, when we find out that they haven't received
their money, we do follow up with the treasurer to understand what the delay is.
All right. So I would encourage all my colleagues to make that phone call, because
our organizations, our SSAs, are waiting out there for their
money too, to make their budgets.
If I could add to that,
we're still waiting for our property taxes.
So, we still haven't received all of the money from 2024.
Okay. Thank you for that.
Two minutes?
Okay.
I thought it was seven.
Seven for the first round.
Go ahead, Chairman.
You know what? The Chairman gypped me on my first round.
I'm just going to say that.
I wanted to know, in the forecast that's coming up in August, can
you commit to giving us a
presentation that shows us the gap with
and without one-time measures like the TIF
surplus, the debt sale, the reserve
draws that we can see?
I will
work with my team to see what is possible, and I will make sure that I
come back to you with some examples to see if that
satisfies what you're asking for.
Okay.
And
to our Mr. Marr,
there was a conference in
February in Vegas by the
annual Conference of the
Receivable Management Association
International. That's where people go.
It's just a whole bunch of debt buyers.
They come together and they make deals.
Did we send anybody to that conference this year?
No, not to the best of my knowledge.
That is the first time I have heard the name of that conference. Not aware of it.
Okay.
And I guess my last question, I've been reading
about the whole
gun prevention office that
the mayor wants to set up. It's $100 million.
I think people want to see, where's that money coming
from?
So the office that the mayor has set up through executive order,
it exists today in the mayor's
office, and it's roughly about coordination.
I think that advocates would like to fund $100
million. I don't know very much about it other than what I've read in the paper.
What I've read is that it's not new money, it's the existing money that
is currently in other departments, really consolidating and collapsing
it under this one office.
Okay. And then thank you for that. And then my last question has to
do with special events. I know that there was some kind
of cost recovery ordinance that was
supposed to come to the council. Do you know when that's going to come to us?
So it's probably going to be several ordinances because there are a number of areas
in our current municipal code that we are going to be making
proposals to shift,
to essentially increase our ability to recover,
and also to be in line with what we see a lot of other peer cities do.
According to the roadmap in the efficiency reports,
we're looking at sometime in September to bring
those before city council, once we have vetted
what's possible, what's feasible,
and also get a little bit more stakeholder input on the
impact of those-
And is there anything coming out from that special events cost
recovery task force that was put together that you can share with us?
So
I love that you call it a task force.
It is over 21 departments,
and the mayor's office, including a lot of
different lenses around
not only the operations because that's what drives everything, but looking at
policies,
and how they might impact from an equity standpoint.
So the things that we've been looking at in relation to our peer cities
include things like
the types of events that we collect or receive
recovery on. Right now,
amongst our peers, we
have ordinances in place to collect on very limited
types of events. Looking at how we
try to pre-estimate and pre-bill,
rather than waiting until the end to bill.
And that brings clarity for organizers upfront to know how much something is going
to cost. Looking at streamlining our permitting process to
bring,
you can call it a mini cut the tape, bringing more clarity for organizers.
And that does require us to change ordinances because currently we have
two commissioners that are permitting commissioners.
Trying to think of other things that we're looking at.
Looking at
having differentiation or
tiers based on event size. Right now, we
charge the same permit fee irrespective of the event size.
So those are some of the things that we're looking at.
Again, we haven't decided on any particular one
because we're still trying to understand impact.
We are excited to bring some of those forward for consideration,
and helping you to understand why the ones that we are bringing forth are the ones
that we believe are important to help us increase costs.
The other big thing that we're looking at is right now,
for most of our events, especially qualifying
stadium events, we can only recover for traffic management
services when we know there's a whole host of other services that the city
provides, including CPD doesn't just do traffic management services
for special events. They do security,
terrorism threat analysis, and providing
people at those events to carry out
safety.
Streets and Sands provides a number of services to events.
2FM provides a number of services to events.
CDOT provides street closure services and so forth.
So we're looking at the fact that we do all of this-
... uh, support of private events, but we have a very limited, um,
cost basis under our current municipal codes to actually recover.
Okay. Well, thank you very much. I appreciate the thorough
answer right there. Uh, that's it for me right now, Madam Chair.
Thank you,
Chairman. Coordinator of Information, Alderman Nudged.
Thank you, Madam Chair.
Budget Director, in response to Chair Dowell's question about the 100
million, you said it would come from other departments.
Do we know what departments it's coming from?
Again, I don't know because I wasn't involved in the discussion.
And this is, again, advocate-led.
The mayor's executive order didn't reflect that.
So it's not moving the money right now.
The mayor's office,
the Office of Gun Safety, is about coordinating all of those departments and
how they are spending those dollars.
But it's existing dollars that exist in our budget today.
But I don't have all of the departments, but I can surmise it's
CDPH because they do a lot of
anti-violence delegate work. DFSS,
CPD,
the mayor's office itself through their re-entry programs and
a couple of others that probably I'm not thinking of right now.
I'd like to see, through the chair, the exact breakout, because $100 million is a
lot of money. And just to see exactly where it's coming from.
Sure. Again, the $100 million comes from advocates, not from the administration.
So I can
try to find out what they were thinking about.
Okay.
But that number was put forth by the people who are advocating for
an office.
Madam Chair, if I may. I'm sorry,
but the executive order came from the mayor?
To establish an Office of Gun Safety, which is a coordinating office.
Right, but-
The $100 million-
But when you say advocates, what is-
Maybe she's trying to understand what this advocates means.
What does this advocates mean? I thought it's the mayor's executive order directing
the 100 million.
No. The mayor's office
executive order directs the establishment of an Office of Gun Safety, which is
coordinating with existing departments who
establish grants for anti-violence and violence reduction.
Those dollars stay in those departments.
Okay. I hear you, but I think I need a lot of clarity on that.
Sure.
Thank you. All right. Thank you. Our next speaker is Alderman
Quinn.
Thank you, Madam Chair.
I've heard
two different pieces of the timeline for the supplemental pension
payment. I just want to make sure I have this right.
I think maybe the best place to start is what is the total cost of the supplemental
that we're going to pay?
Sure. Give me just one moment.
So the total supplemental payment-
Yeah
... for calendar year, budget year 2026 is approximately
260 million.
260. Okay. And then do I have it right that you'd
mentioned in January we paid-
130
... 130.
Precisely half.
Okay. And then we're waiting
to make the second installment sometime
third quarter, maybe fourth quarter?
That is correct.
And we have a commitment that that second installment will be paid?
We are working through an analysis right now to commit to the timing
of when that second installment will be paid.
It's not an if, it's a when.
That's a real important distinction, sir.
I want to make sure you choose your words correctly and accurately and cautiously.
I appreciate the distinction.
One of the challenges
which we are facing this year, and we faced in prior years,
is delays in property taxes from Cook County.
I'm aware.
Last year, roughly speaking, we supported three of the four pension
funds and advanced them. I want to draw this distinction between the supplemental
payment and advancing the funds payments,
as property taxes have been delayed.
We are trying to manage that cash flow issue this
year by analyzing when we can make the timing, or
better yet said,
when we may be able to make the second installment-
And the second installment-
Of 130 million
... It's 130 million? Because I thought, and this is where the confusion, I thought
budget director, you mentioned something like 110 million.
So I want to make sure-
That's the corporate amount. That's the amount that the corporate fund supports.
Okay.
Other funds also support.
Great. That's helpful.
And I meant to actually jump in earlier when she said the corporate fund portion is
110 of the 130. The remainder are enterprise funds.
Got it. Okay. So,
we're looking at the third or fourth quarter, but you can't commit to
when?
No. Not at the moment. What we can commit to is doing the
analysis to try to understand how the property tax delays, which right
now are expected to be around two months,
might impact when we actually make that payment.
But it will get paid.
My goal, my commitment,
is to figuring out when we can make that payment in the context of all the other
things that are going on here at the city, including property tax delay.
We'd like to think that that's a real important item for this council that you're
standing before right now.
Respectfully, Alder.
Of course. Respectfully.
I
am acutely aware, because I deal with the rating agencies very
frequently, of how important the advanced pension payment is.
And the fact that we've made between '23, '24 and '25,
we've utilized assigned fund balance,
approximately $820 for the advanced pension payment to stabilize our credit
ratings.
I'm acutely aware of how important it is, and I am committed
to identifying when we can make that second installment In the third or
fourth quarter of this year.
Okay. And respectfully, sir,
that was one of the driving forces behind the budget
battle
last December.
It's not going to go away.
So I know you deal with numbers and rating agencies, but the
politics of the city and the promise we
made to our workforce isn't going to go away.
So I'm glad we're on the same page. Thank you very much for the clarification.
Thank you, Madam Chair.
Christopher, question?
Thank you. Alderman Vasquez?
Respectfully, thank you.
Next. So I wanted to follow up on the question I had before
related
to the encumbrances. So I appreciate the context
on both. But ultimately what's
similar,
regardless of whether you're department or a ward office, is there
are funds that you believe you're using.
We're being told, "Hold on to some of those funds," whether it be there's
contracts coming out if you're a department, things that are going to be
expenditures, or if you're a ward office, "Hey, we only want
you to spend this, hold on to the other fund." That part's similar on both,
correct?
For the ward and the committees?
Yeah. Yes.
Yeah. So
to make it even simpler, if I might,
what we could have done, which is what we do to departments, we could have just
lowered your budget, right?
Right.
We could have just taken the million dollars, that aggregate for
all of the committees and the wards. We could have just lowered the budgets.
In conversations with the chair, it was preferred
to keep the budgets what they are, but show it
as not used, and the way that we do that is through an encumbrance.
Correct.
Which is different from departments. They have their budgets.
Yeah.
And the encumbrances that you see in their budgets are they have set aside
money because they've inked a contract,
and they will pay it over time.
Yeah.
So they want to set aside those dollars now in their budget, so they know that
those dollars are available to them-
Anticipate using towards-
As their invoice is coming.
Correct. And those are all, one or the other,
they're estimates.
Yes.
So there's a world where that money isn't spent.
Yeah.
What happens to the money?
So just like the money that we don't spend if we don't hire or
hiring happens later in the year, that is expenditure savings.
That is part of the budget. The hope is that your expenditure savings are
higher than if you have underperformance of revenues, right?
So if you have
better revenue performance and you have expenditure savings, you end up with a
budget surplus, which then goes into you.
This is part of the conversation we had with Alderman Lospada earlier.
That's part of your budgetary surplus.
But if you don't, then those funds go to wherever the hole is.
Mm-hmm.
So in essence,
what you could have done is exactly what you said for the ward offices in
particular, because I think sometimes we get a little more personal about that.
Could've just cut the budget rather than say, "Here's some money you don't get to
use,
and it's going to go somewhere else."
Yeah.
Okay. Just clarity there because
it is frustrating when we're being told, "Here's some budget you can't have or
use. You might as well just make the cut." And I think it's not really what you
all did to anybody, because the council has to vote on it.
But ultimately, you've got council members voting on a budget they're not going to
get to use, rather than saying, "Hey, your budget got cut." Right?
I'm happy to have the conversation about how we want to do that for '27 if
it brings more clarity.
Yeah. For me, it's clarity and just being straight up.
Because being told we have funds that we're not going to be able to use, and then
when we have these larger problems related to now part-time benefits that we
have to continue to working through, it is particularly frustrating.
And I'm not putting it on any one person more than the fact that we're just not
having a transparent conversation about what is or isn't happening with money.
Okay.
It seems a little strange that DPD has only spent 8.5% of its budget in six months.
Can you explain why?
Are you looking at the mid-year report?
Yeah.
What page in particular?
I'm going off of whatever our team tells us.
Okay.
Let me see if I can find what you're looking-
But I think it was something that came up, I don't know if it was mid-year, but we
had heard about it before, that DPD wasn't spending the amount that they're
allocated. And so I was trying to figure out if there's a timing issue or why that
might be the case.
Oh, 8.5%?
Yeah.
Okay.
I can look into that. But I think
a large part of their budget is
in the Neighborhood Opportunity Fund, which is what they use for purposes of
development.
And that's the part that's bringing their percentage
down because if you look at the corporate fund, through mid-year of the year,
they've spent almost 50% of their budget, which is where most of their personnel
sit.
Got it. So it's the amount they're getting from the fund is also, because of that
size, it comes off looking at 8.5
Yeah. I mean, their budget is not just comprised of their personnel.
It's comprised of a lot of their grant programs and their economic development
programs, which occur over time.
Okay.
I saw that the vacancies were trending in
the positive direction, but we also eliminated a whole bunch of vacancies.
So if you're looking at the
overall three-year trend,
how are we doing, right? Because if you change the denominator and you're removing
the vacancies, you're going to look like you're better in relationships.
How do you parse that through when those numbers change?
Yeah, we can definitely get you some
statistics on that. One thing I will say is the City of Chicago, probably
like many local governments, have benefited in a couple of different ways when it
comes to our hiring.
The biggest benefit is the federal government got rid of a lot of people.
And so we are seeing a ton of people come through our
recruitment that
used to work in the federal government.
Right.
I think that you have a couple of different things that are
That are happening. We have, in a lot of places within our workforce, an aged
population which are ready for retirement, and that's something that we've got to
plan for because we're going to need to replace not only that knowledge, but
also the workforce. And so, one of the things that we share
with our colleagues in DHR and with our departments through a
dashboard that we send out every month is
our workforce statistics,
including, for their specific departments, eligibility for
retirement.
Sure. You mentioned, obviously, for folks that are close to retirement,
and I can't recall which of my colleagues asked about buyout options for the
pension. You said
that
you will
go look at it, meaning you haven't looked at it.
Right.
I'm curious as to why it's not been looked at.
It may not be something we move forward with, but why not even do the analysis to
go, "Hey, if we did do this, we might see some savings."
Has there been no analysis on that at all?
I don't know if the CFO's office may have looked
at this. The budget office hasn't looked at it. It's complicated.
You also want to make sure that you have workers who are paying into the
pension fund in order to sustain benefits.
So we would have to look at both how much would it cost us today,
and if we have the funding set aside to do buyouts, but
also what would that do on the back end to
the funding necessary to sustain the fund themselves?
Yeah, and to be clear, I'm not necessarily asking the question as a proponent of
one or the other. I just want to see the homework before we can make a decision.
So I think exploring that, to me, feels like some level of due
diligence given the challenges, because all these things are nuanced and hard.
So yeah, anything on that would be super helpful.
I, again, appreciate the fact that we have the midyear budget hearings.
I think it gives an opportunity to ask questions where we're normally not able to
get the answers quick enough before we get the budget, and I think it does lead to
more thoughtful engagement. I know that all of us have different
views on how we might approach certain math problems,
but data is also data, which is why
yesterday we submitted
legislation to start to move forward with an independent budget office.
Same way as we're talking about independent legal counsel.
Just having an umpire to call balls and strikes as to what's going
on, so that way people aren't lobbing shots at each other about whose numbers are
right or wrong would be helpful, because I think some of it is process, and
people can have questions and concerns about whether a process
is moving quick enough or not. But sometimes math is just math,
and I think that the way this is going right now,
where we're heading into a budget season, we got what appears to be groups
that are kind of entrenched on either side of an argument, and we're on an election
year, does not lend itself well to have a actual
process where we have a budget that a majority of the council can support.
So I would
advocate to our colleagues and the general public to be pushing for an independent
budget office and independent legal counsel, because I think we have two co-equal
branches of government now. They should be on an even playing field.
Thank you very much, Chairwoman.
Thank you. For round one, Alderman Hall?
Thank you so much, Madam Chair. And before I even
ask any questions, just wanted to say,
Annette, you have been consistently
available, and this hasn't been a easy task.
Nevertheless, you and your staff have
been great. Same thing with our comptroller, helping with some Sixth
Ward issues and things of that nature. So I'm just grateful.
Before
I go further, wanted to state that.
I have a few questions.
Alderman, before you start-
Yes, ma'am
... can I get a motion to-
I'm sorry
... rule 59 to allow Alderman Hall to participate remotely?
So moved. All those in favor, signify by aye.
Alderman Hall, go ahead.
Yeah. Thank you so much again, Madam Chair. My apologies if I missed this.
But the current state at this halftime
juncture with the current condition of the city
finances, what's the probability in estimated
amount of city layoffs that might be occurring?
If that's been answered already, could you repeat it?
Because I may have missed it.
Well, actually, Alderman Sichel Lopez somehow got the number.
But if we're looking at $90 million gap, that equates to about
2,000 city jobs, on the corporate fund to be exact.
Got you. Do we know out of the 2,000, is this just going to be across
the board, or how does the cut selection go?
So if you're looking percentage wise,
and also the
dollar figure of salaries needed to
equate to that $90 million, 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.
Yes. So-
But that mean you're wiping out Streets and Sans,
you're wiping out
the part of CDOT that's on the corporate fund.
You're wiping out large chunks of
DPD and DFSS, and CDPH.
Okay. So you said a lot, but I just want to make sure I understand it
correctly. You're saying that the police department would
be hit first or the hardest when it comes to this
2,000
job cut proposal?
So in order to do it, what we are estimating is that you'd need to hit CPD by
1,000 positions.
Got you. Okay.
And then the other 1,000 would be in the different departments you just mentioned,
correct?
Correct.
Okay. Cool.
My second question is,
well,
part B to that question is when does the timeline to that start, or are
we still trying to figure out? When do the
pink slips go out?
Well, 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.
There are practical realities to doing any cuts.
Because these are mostly bargaining unit positions,
you'd have to abide by the terms of the bargaining agreement, which
require at least a 60-day notice,
before you can implement.
Each one has different terms. So,
if we were to try to do this, the earliest at the
point that we are right now that you'd be able to implement
is probably September.
Got you. So, the earliest would be September.
The longer we go in this direction of uncertainty
or what have you, we're looking at essentially by Thanksgiving.
So,
that's not good to know.
And my second question is the-
Your third.
Oh yeah. Third. You're right, Madam Chair.
In order to turn the ship in
a different direction, how much revenue would need to be
generated in order to prevent what you just mentioned?
So at the very least, 90 million.
We do hope to have better numbers in a month when we release our
forecast for 2027. But
right now, if we were to say the number that we're
currently forecasting, we'd need to either cut or generate revenue of
about $90 million.
Okay. Cut or generate 90 million. And what's the doomsday for this
cut or generate $90 million situation?
Because you said that the projections are looking better or what
have you. So, what's the
deadline to have the 90 million? Is it ASAP, or is it
something that you all are saying, "If we don't have it by August the 1st," then we
send out the notices?
I think that we'd probably need to make a decision about how to deal with the gap
by
end of next month.
Okay, cool. So by the end of August, if we haven't figured out an
equation to find $90 million, so then we
go 60 days post August the 31st
and October. So then we're looking at mainly Thanksgiving and Christmas,
everybody in that category of 2,000 losing their
jobs if we don't find $90 million by the end of
next month. Okay, in concluding,
in this equation to figure out how to get $90 million
by the end of next month, is there any favorable
opportunities that's in the forefront that could solve
for this $90 million, other than hoping that the
revenues spike
in other areas? Is there a plan for the $90 million gap that you all are
looking at that could suffice?
We are looking at a number of options right now to put before the mayor
and city council. I'm reticent to say them right now because we're
still running the numbers. We're still thinking through the pros and cons of each
one, and we want to make sure that we provide as much
information as possible so that this council can make informed
decisions.
Got you. Okay. So we got here, and we've heard everybody's perspective
on budget from my colleagues to your office, so forth and so on.
And I just want to,
so that I can prepare for my senior visit at 3:00, because
they want me to ask this, and I'm going to ask this question.
At the beginning of the year,
or whenever this budget was, the end of December,
did we have the guaranteed money and certified
strategy to get this budget funded
to prevent this? That's what Ms. Jones want me to ask.
I repeat, she wants to know, was the
budget funded with the money proposed in this budget?
So what I would say,
Alderman, thank you for the question, is
there were a number of strategies to raise revenue in this budget
that
we thought were
highly unlikely to materialize, and we voiced that at the end of last year.
However, when the budget was implemented, we went straight to work
because at the end of the day, again,
we had to implement the budget. We had to execute it as passed, and
we've worked as hard as possible to
ensure that we tried to get the revenue as passed in the budget,
and have reported back to city council on a monthly basis,
and in some cases more frequently than that, our status of being
able to do that.
Alderman Hall?
Oh, I'm sorry.
So
essentially, in concluding, we got to August the
31st to figure out where $90 million
is going to come from.
And if we can't figure it out, then
1,000 officers are out of a job, and then the other 1,000 will be
spread across. So I'm clear. Thank you so much,
Budget Director, and thank you so much, Madam Chair.
Go ahead,
Alderman.
So, Budget Director, are you testifying that
$90 million would equate to 2,000 positions
being eliminated?
Yes.
So that's the average of $45,000 a year
is the average employee. You've stated that 1,000 police officers
potentially could be let go. What is the average starting rate of a
police officer
minus overtime?
Minus overtime, it's around, I believe-
$90,000, and we've seen that overtime
There is overtime in that department, and it's budgeted.
Now, you stated that it's 1.2 million below what was
budgeted, but there is overtime that's in there, and its average
starting police officer makes about $90,000 a year, minus
overtime.
So I'd want to make sure that's on the record, because 2,000 positions at $90
million is $45,000 a year.
Police officers don't make $45,000 a year.
Streets and sanitation workers don't make $45,000 a year.
Electricians don't make $45,000 a year. I can go on and on.
You're stating it at the time of a full year's salary.
At the time that we would have to implement this, it's not a full year's
salary, so you're talking about months.
So the $90,000 that you're talk-- or the $45,000 you're talking about
is based on a portion of the year, not a
full year's salary
in order to save the money. So you have to actually go deeper in the number of cuts
you have to make, because it's not the full year's salary.
So again,
I think...
Well, that was a point of information, so I'll wait till my...
Oh, I thought you was on your turn.
Okay.
I'm going to deduct it anyway. Go ahead.
Go ahead, Alderman Moore.
Thank you, Chair. I just want to make sure I'm hearing this right, that
historically, the police department, we've had too
many vacancies or not enough police officers in particular,
and when we need to make cuts, that's the first place that we're
going?
I didn't say that. I said in order to accomplish this, there's no way to do it
without hitting the police department.
They have the highest salaries in the city.
Again, it's not a full
year's salary in which we'll be able to
accomplish $90 million. The longer you wait to
let people go
further into the year, the more positions you're going to have to cut to get to $90
million. Because it's a portion of a salary, a portion of the year.
So in order to get that, you're going to have to hit some of the highest salaries
in the city. And also proportionally, that's where the
largest, again, 40, almost 50% of our budget is public safety
positions, public safety
infrastructure.
Thank you.
So without that, you're potentially talking about wiping out entire departments
otherwise.
Oh, the rubber's meeting the road. All right. Getting down to the nitty-gritty.
All right. So I have,
just for the record,
Villegas, Cesar Lopez, and LaSpada. Is that correct?
Okay.
For round two?
Mosley. Who's online?
Hall.
Hall?
Yep. Round two.
You already went. I heard.
No, I'm saying is it round two?
Oh, you need a round two? Okay.
Yep.
He did round one, right?
Yes, we did round one.
Okay.
Oh.
Okay.
All right. Chairman, I'm on the move to a quieter
spot. Sorry.
Oh, yeah, she's breaking up.
Oh, she still hasn't had round one.
Correct. Did she?
She couldn't.
We couldn't hear her. I heard that. Vice Chair Lee, are you ready? Are you...
I should be in the car in, like, five minutes. So, Oh, no. She is...
You got to find a better location. So, all right.
We're going to go Alderman Villegas, followed by LaSpada,
Cesar Lopez.
And then
I
want to put it into context, too, the $90 million,
2,000 positions, and $90 million is .005
of the budget. It's a very small number, but again,
that's... Special Events Task Force.
You mentioned that you're still looking at what other cities are
doing despite...
Go ahead. I'm sorry.
We've done the analysis.
Yeah.
We're now trying to determine the proposals that we would like to bring
forth. So we've done the peer benchmarking. We know what other cities are doing.
And frankly, a lot of cities
are moving in even more aggressive ways
to get recovery on special events.
LA County, LA City is one that's moving pretty aggressively as
well.
And those ordinances are expected this year or next year?
So we're working to... No, this year.
They're going to be this year.
Okay.
There are a lot of things that we need to change in our ordinances in order
to match or even come close to being in alignment with our peers.
I think that we're thinking through, are we going to do it all at once or are we
going to do it in batches and phases?
Just because this is an environment where people
have truly enjoyed
getting city services for basically no cost.
And so what does that mean from a change perspective?
What does that mean for the environment where the city has pretty much supported
and subsidized private events for a very long time?
Yeah. I think that it's good and bad, right?
Because, obviously people want to do events here and stuff like that, but yeah,
there is a cost. I'm glad that you're looking at that.
Hopefully you get that this year. That would be great.
The ERP.
So obviously,
I think there'll be a joint hearing with the chair and ECTD around this, but
are you looking to...
It's too late now. Because obviously the ERP system's been talked about for a
couple of years now. Glad to see that the time and
attendance, one portion of it, but there are cost savings in there,
especially when you're talking about hiring folks, is to get them on
board quicker. We know ERP works with that, and ERP was focused
on personnel, finance,
time and attendance, all that stuff.
Oh, it's also HR.
HR, yeah.
That's what I meant by personnel. HR.
Where is that at?
The remaining part of the ERP?
Yes.
So that's not stalled. We're doing both and.
I will say that the timekeeping piece is really massive, and
to your point, you've made this point several times, it is where a large
cost savings we'll be able to achieve
once it's in place. And so that's why we wanted to start there.
I will say that just because that's starting doesn't mean that we're not doing
other things. Part of the organizational analysis initiative and
the efficiency work stream that we've been talking about,
part of that is actually putting an interim system in place that
will both help us streamline our hiring
process, look at where there's bottlenecks,
use interim technology so that departments know where they are in the process.
We know where DHR is part of the process.
And so
even if the full ERP technology isn't in place, we're
looking at interim solutions that can help us in the interim.
Yeah. And then I would love to have a conversation with
you and your controller, the CFO, around the fines and
fees.
Because I
want to make sure I'm understanding this correctly, because the fines and fees are
parts of a budget. We don't collect it, it impacts it.
And I just want to better understand from a government perspective, the
accounting that's utilized in order to
state that it doesn't impact our budget, but we don't collect 100% of it.
And you asked me through email, and I have the data that you requested
that we'll get to you by the end of today.
Yeah. So I know that we haven't connected, so when we get a
chance, let's connect,
Michael, you and myself-
Yeah
... CFO as well. Thank you. Thank you, Chairman.
Thank you. Alderman Espada.
Thank you so much. I want to
ask specifically on page five about
under local non-tax fines, fees,
forfeitures and penalties, and also
leases, rentals, and sales, both of which are down
extremely significantly, 45.3% and
69.0% respectively. Is that a
timing issue of collection, or is that related to underlying
economic or behavioral conditions?
Fines, fees, and forfeitures, the biggest part of that is the debt sale.
Yeah.
So that's $89 million of that $112
million.
The other parts of that are just implementation of some of the initiatives
that we invested in this year's budget.
Most of those are coming into
the third quarter, like the debt check portal.
Additional, as I said, tax auditors.
So we're
on pace, I think, to meet the $118 million that we called out.
But in addition to that is the debt sale, and that's really the biggest hole.
As it relates to leases, rentals, and sales, the other area that you asked
about, that is largely the advertising and augmented reality
revenue that hasn't come in.
So are we otherwise, if you discounted that, if we looked at 2023,
2024, for example, are we more or less on pace
with what we would see with previous year's budgets?
In the fines and fees category?
In both categories.
So if you take out the revenues, the debt
sale, the
augmented reality, and the advertising, for the things that we
budgeted,
we are
right in line. So as you heard Comptroller Belsky mention earlier,
we've seen increases in both our debt collection and in our enforcement
collections as well.
Okay. Thank you. My next question is, I really do want to understand if we are
currently negative
1.5% difference on corporate fund
budget actuals,
how does that translate to the end of the year
negative $122.8 million revenue under performance?
Does that assume that everything that is at
0.00 remains at 0.00 through the end of the
year?
Everything but probably the VGTs.
Because again, in order to forecast
out that we'll receive revenue in debt sales, revenue in augmented
reality, and revenue in advertising, we
need people who are going to either buy the debt,
structure the augmented reality, and be able to tell us
based on the time that we entered that contract, how much they believe we'll get.
And as well as on the advertising, having the teams or
the companies that will do that, they have to be able to tell
us at the time that we've entered the contract, how much we'll be able to
achieve through the end of this year.
And so right now, the forecast
indicates that we'll have $0. If
later in the year we're able to achieve it, that's revenue that we will be able
to benefit from. But right now,
just the way that these are going, the forecast is
assuming $0.
It's helpful to understand the assumptions.
My last question is going to be related to the library budget
where we see currently about 108 vacancies.
Noting that the personnel side of that is
through the CPL levy, which should be
in a predictable position. What are we doing to
hire for those vacancies?
I think CPL has to put in the request to hire, which they've done a number
of, and we've approved their A forms.
Again, I can't speak to operational management of
departments, but I can speak to is whether my
team has received a request and whether we've approved a request.
So
has-
Are you saying that CPL has not requested to fill those
positions or that the request has not been approved?
I don't have any outstanding CPL requests to hire in my
inbox.
I can go back. We've approved a lot of A forms for CPL.
Oh, I know. I'm just curious about the 108 vacancies.
But
I will follow up with CPL directly. Thank you.
Right. Thank you.
Alderman, if you will,
I wanted to give you some data. So the overall revenue collections are up
9.76%, but some of the initiatives
we talked about, speed
17% up,
booting 11% up,
all of our administered taxes 21% up.
So everything is tracking either at or above what we projected.
Thank you.
Alderman Mosley.
Thank you, Chair.
Cost savings and efficiencies. I know we had the Ernst & Young
report and amongst other things, where are we with
those initiatives? Meaning that last year when we
discussed them, we said that this is not something that we can
just interject all at once. We'll do it over
time.
Yeah. Thank you, because there's some exciting things
going on with these initiatives that we
detail in our report every month.
I appreciate you acknowledging that a
lot of these things take time, right?
Because we are fundamentally changing how departments operate.
In the case of special events cost recovery, that is a massive operation over 21
departments and two sister agencies to really change how things have been
done over time, which is very decentralized in nature and not coordinated.
And so we are
literally changing systems.
One of the things we're working on right now is as we
implement each of the
milestones in the initiatives,
as we continue to
operate under the new processes, what does that mean for long-term
revenue and long-term savings? And so we're working on that dashboard right
now, and hope to be able to provide that in the coming
months to city council. So you can understand, because we put these
in place, this is what you can expect going forward in savings and what you can
expect going forward long term in revenue.
But
what you're seeing on the screen right now is in the report that we send to city
council every month, so you can track along with us
for each of the initiatives. The one that's not on here is fines and
fees, which is really about how we evaluate fines and fees every year.
So there's no budgetary target related to that, just we need to change our
process and become more transparent to the world
about what we charge for fines and fees.
So you can see here that we're ahead of target on a number of
our initiatives, including benefits, org optimization, and fleet,
which are real savings or real revenue to the budget this year, and will have
real savings and real revenue in future years as well.
These are not one time in nature.
Procurement has been working, and you can imagine
changing how we do procurement and also consolidating in some cases
where departments have their own procurement authority takes time.
But they're tracking.
It took them a while to get their process in place.
But as the user department, I get emails from them every
so often in trainings about how they're redoing, how they're doing category
management, which was a recommendation in the report.
How they are streamlining and looking at
the maverick spend, as Alderman Nugent asked about
earlier,
and so forth. And so we saw a big jump in procurement
savings reported out from DPS from
April to May, and so they're accelerating as they put more and more of
those
new initiatives and new ways of doing the work in place.
Land sales have accelerated as well.
They had a big
closing in April, but are tracking towards another $10
million in revenue by the end of this year based on what they
have in their pipeline. And then finally, I'll say
real estate, we are anticipating getting a roadmap,
and been working on it really diligently since January of this year about what we
want to consolidate, what leases we want to get out of, because we have more space
than we need for the
population of workforce that we have.
So all of these it
takes time to get going, and now we're starting to see the ramp-up on a lot
of these.
Yeah. I just want to add to this. So I lived in
Detroit, Cleveland,
and New York City, and I was in academia, spent a
lot of time studying
recoveries of these cities when they're in fiscal stress.
I think this is very
maybe understated and possibly underappreciated,
but this effort that's going on here is remarkable.
We're literally reinventing government and the
implementation and the organization, how it's moving
forward by the budget director,
is just extraordinary. And also at the rating agency, I met
with a lot of cities that were having to deal with fiscal stress.
I've never seen anything more comprehensive, a more comprehensive
look at the government itself, but also all of our
processes. And a
lot of these governments would show us at the rating agencies a book
saying, "This is our plan," but they never get implemented, and this
is really truly being implemented in a very organized and deliberate way,
and our budget director should be commended for that.
I'll ask,
particularly around collections, and even
as we change things like automations, how are we leaning into those,
focusing on collections? We have all this outstanding debt
that doesn't seem like it's really collectible, but when we do things like
fee forgiveness days and so forth, they seem to trend up.
We're working on some legislative things together that seems like it could have an
impact.
So looking forward to that. Just because I know I'm at
time,
I'll be also paying attention for things like
menu equity in this budget.
And then also, what are we doing around speed cameras, more
notices, and particularly how those dollars are reinvested back into the
communities that it has come from.
And lastly, I will say that,
and would love an answer on this one,
how are we going to work together for the budget
this year? I think there needs to be a value analysis
that is done, potentially between the administration and also the
council.
Because even today, I'm hearing a lot of folks carrying the tone
of, "I told you so." And we've heard that last year.
We've heard that,
actually, if we go back, the first year here, my colleague in the 45th
Ward said something that essentially came to pass
because every year we've worked to close a deficit.
So I hope that we together can get our values
aligned so that this budget process moves a little
smoother.
Just speaking to the first point, we're actually
revising our leak relief program to make it broader so
more people can take advantage of it.
This is when people get billing spikes because there's a leak in
their line. Sometimes they don't know it.
It's limited to
certain types of housing and income levels.
We're expanding that out. We are also going
to be aggressively doing PSAs on our relief
programs. It's kind of on pause now because, again, we don't want to
cannibalize
any of the vehicle debt if someone's thinking about buying it.
But
these relief programs, really, we have found is that we get money that we
were never going to have received.
So if we make them
more known to the public through public service
announcements, we expect that we will collect more.
We saw that when we did the ticket amnesty last
year. We did PSAs at the halfway point,
and we were only at about half the revenue at that time, and it
all came in within a few weeks.
All right. Great. Exciting work. As always, you have a partner in 21.
Thank you all, all three of you, and your amazing teams for all that you bring.
Do you mind if I just respond to
something you said before about collaboration for the '27 budget
season? I couldn't agree more. I
run an office of professionals who are
really good at what they do. They're really good at
ensuring that the assumptions that we put in our
forecasts and the analysis that we do, whether it's on behalf of the
mayor or for City Council, is sound.
We are a non-political office.
We are an office that is based on data and facts.
And so one of the things that I want to ensure that we're able to
bring to the table is those facts.
Alderwoman Hadden mentioned before a deficit of trust
and levels of frustration. I think that's on all sides, right?
I think we get frustrated when we give information
and it's essentially discarded or said that it's not
true.
I put a lot of stock in the people that I work with.
I put a lot of stock in the specialty that they bring to the table, and they're
public servants at the end of the day.
I would just ask that the same level of respect that
we have for City Council and the work that you have to do and the pressure that
you're under, that we afford our public servants the same
level of respect and the pressure that they're under.
Thank you, Chair.
Everybody wants to get to heaven, but nobody wants to die.
That's the
elephant. Oh, when the elephants fight, the ground gets trampled.
That's an old African proverb. Yeah, that's good though.
Alderman Cesar Lopez.
Thank you, Chairman.
And just for these
round two,
just a few clarification in terms of the particular of these
gaps. Who changed the liquor tax sale,
and why is it underperforming? For the liquor tax sale in
particular, how did the
liquor tax-
Oh, the liquor tax
... liquor tax, yeah.
So I believe that that was
introduced by City Council on the day that
the budget ordinance was voted on.
Mm-hmm. And why, in your perspective, is it underperforming?
I think there's a number of reasons.
One, and I know Brian Carlson's in the box, he's the expert on this.
I think, one, the effective tax rate is lower than what
it was prior to 2026. I think there's
also the fact that
what we're seeing is
with the change from percentage base at point of sale to what it
used to be, which was paid at the wholesale level, a lot of the
liquor was already purchased under the prior regime, and so
they're getting a credit for having already paid for it.
And so we're seeing some of that underperformance, but Brian is the one
that has to enforce this and is the one that's talking to a lot of the
retailers who are now implementing it.
So I want to give him a chance to talk a little bit more in depth about what he's
seeing from the underperformance.
Okay. Thank you, Annette. Brian Carlson, Department of Finance, Tax
Division.
The break-even point at the
1.5% tax rate that we have right
now for off-premises consumption for a six-pack of beer
is $10.99. Every six-pack of beer that
sells for less than $10.99, we're losing money on right now.
For
spirits and hard alcohol, the break-even point is
$34.99
for a 750-milliliter bottle.
So every single bottle of spirits that sells for less than that
is generating less money in liquor tax
for us today than it was before the change.
So those are two examples of why
the money is not coming in at the levels that
we saw before,
even though I know the projection that came in for
2026 with the budget was expecting an
increase. So I was here in December and said
that my expectation was we would lose at least $4.2
million with this change.
That number is proving to be probably
less than where it will end up
at the end of the year here.
Thank you. I think that's important to go to the facts.
And my understanding also is that
city council received,
since January 1st,
some of the reports for OBM, just making sure that we
continue to
follow that.
To me, the interesting part is that, and maybe that's a question for
anybody there,
seems like the
revenues the administration put forward are a
little closely aligned. So is it the other projections that
you had don't seem to have these huge
gaps of projections versus what
actually happened.
So are there any revenues also the administration is
underperforming? I think
the closest one is the
checkout bag tax, but everything else is huge, including
the liquor tax. So
perhaps my last comment would be, again, what do you think in terms of
the co-governance piece? I appreciate and I agree with Alderwoman Dowell in
terms of we got to get back to co-governance.
I do think this is a perfect example of the
issue with,
and also like Alderwoman Hadden mentioned, when the goal is just to
embarrass, to undermine. I think Chicagoans pay the consequences of
it. And the bad elements, to me, not being public about it, was public during the
budget season and public about it now.
I think billionaires like Michael Sachs don't bear the consequences of this, but
Chicagoans certainly do. So my last comment, again, maybe for you, any
other thing that the administration, because we had the corporate head tax.
I'm really curious about what would have happened.
We had the corporate head tax and other of the alternatives
that were provided. So maybe there's anything else in terms of
the administration, and I appreciate you providing that information so that we
can differentiate the facts versus the speculation.
So anything else that you want to add in terms of maybe lessons
moving forward, how we can do to make sure that this doesn't happen again?
This is an embarrassment for those who proposed this.
So what I would say is a couple of things.
One,
Steven has said this a couple of times during this hearing.
There wasn't any consultation with the finance team
regarding the
revenues specifically that were passed by city council,
outside of the ones that were already in there that were part of the mayor's
budget. As I just mentioned to Alderman Mosley,
we take very seriously the methodologies that we put in place
to forecast revenues.
We believe they're pretty sound, and we work really closely with departments who
are a lot of these revenues takes to actually
implement the collection and the generation of, to begin
with, on the assumptions that are baked into our revenues.
And so one of the things that we want to make sure of is that we're able to bring
that type of expertise to bear on revenue sources proposed by city
council, and we're happy to do that.
What we tried to do
last year when the revenues were proposed was to give our honest
opinion about where we think those were going to come in.
We didn't have the benefit of being able to talk to city council about it.
We wanted to, but we weren't provided access to their financial
advisors to really help us understand what assumptions were baked in,
so we did the best that we could.
But what you're seeing in the revenues that are the ones that
were overperforming is a lot of time and
effort on the part of our team to really understand.
We're also really conservative when it comes to things that are new in the budget.
One of the reasons why you see social media tax and
online betting overperforming is because we were conservative.
We didn't have
multiple years of data to help inform where those revenues were going to
go. So we were overly cautious, and
that I think is indicative of what we should do when we introduce something
new in the budget that we are relying on to pay for
things like our pension payments, to pay for things like our salaries and wages
of employees, is to be a little bit cautious.
Because we don't know where they're going to go in the coming year.
Thank you, Chairman.
All right.
I have
Alderwoman Lee.
Alderman Hall, do you have anything?
I'm ready whenever you are, Chairman.
Same here,
Chair.
Okay. Because I just want to understand what we have.
Alderman Conway, did you come back for a second conversation?
I may have some follow-up questions, but I'm good for now.
And believe me, I'm not saving my gotcha questions for hour three.
There'll be some-
Okay. I'm just trying to know what we-
Hour five.
Okay.
Believe me, I-
Okay.
All right.
Vice Chair Lee, followed by...
This is your first, right? You didn't do your first round, right?
No, sir. I didn't.
Okay. That's no problem.
I can hear better.
Yeah, no, she's in a better space now. So, all right.
So Vice Chair Lee will go first, after which we will have
Alderman Hall,
and if there is anything else. Before we do that, let me just make this...
Let me make sure I had to step out for a second.
As I
look at all of this, there's definitely have to be a greater
collaboration between the council, the legislative, and the executive
branch, on the budget, because otherwise we find ourselves in a
position of having to do something midyear.
And of course, we talked about the pain of having to do that,
and it's more painful to do midyear or actually three-quarters of
the year because we won't have anything, moving between now and
probably September, than trying to solve these
challenges. So it's definitely going to be incumbent upon all of us to figure out a
path, which I
thought was going to happen earlier in this year,
that has continued to linger along.
And we also have to remember that it takes two to tango.
There's another one, I'll give you that one.
That we have to work together because otherwise we get
this
type of situation midyear. Just be thankful that it's only $90
million and not greater than
that amount. Fortunately, we've got a strong economy, things are working,
and we'll continue to move forward with that.
But it definitely is going to give us some conversation
over the next 60 to 90 days so that we can land
2026,
not in the red. So,
all right. With that,
Vice Chair Lee.
Thank you, Chairman. As I started to say earlier, a lot of the questions that I had
have already been asked. But just a couple of clarifying things because I was in
and out a little bit.
We ended last year with a $217 million surplus, and
that is in a reserve fund someplace.
Correct?
Got it.
And the $90 million that we're forecasting right now in terms of
a forecasted deficit, does that take into account
any offset from that reserve? And I apologize if you already
addressed this earlier.
No, because again, the end of the year general fund reserve is just
a snapshot in time. In order to use general fund
reserve balance prior year surplus, you have to appropriate it.
So right now, it's not accounting that any of that is appropriated
into 2026.
Okay. So it would take some action for us to
appropriate something from that, if
whatever's left there to offset, if that became necessary. Is that right?
Yeah. And again, we're working on a list of options for how
to resolve the 2026 current forecasted gap.
Okay.
Let me go to, and I'm sorry, I'm going to bounce around.
It's not really going to make a whole lot of sense because I'm just filling in gaps
at this point. Can you talk about how turnover
numbers are impacting just sort of when
your office
releases or signs off on
positions for hiring?
Sure. So throughout the year, departments have
turnover targets that they
have to meet in order for us to stay in balance with their departmental
budgets. And so depending upon a number of factors,
we are throughout the year looking to see how they are meeting
those targets. At the beginning of the year, they fill out a hiring plan,
which is set, that shows what their priorities of hiring
is,
and how they meet their turnover target.
Departments set that. We don't. They give us that and
our hope and
goal is that they just follow it throughout the year and we have no problems.
However, things come up. People leave, attrition happens,
or there might be a new mandate or an emergency that requires that they
move up a specific hire, or they change their hiring plan
in some way. We work with them to understand the impact on
their turnover target. For instance, if they have to move
up a position that was slated to be hired later in the
year, maybe in October into an April timeframe,
especially if it's a position that is higher
salary, that means that they've got to offset it in some type of way.
Maybe pushing another position out longer to be hired, so again, that they
stay in balance. So again-
Does that... Sorry.
Go ahead. Sorry.
I was going to say, does that hold true for revenue neutral positions that are
revenue generating positions?
So typically, when a department is setting their hiring plan, they will
likely move those revenue generating positions to be prioritized over
other positions.
Okay. Through the chair, and I think we haven't touched on it
... a whole lot today. We hear from
departments how long it takes to hire people,
and I'm wondering if, through the chair, we can get the average time
from the time that a request is placed for
positions to be authorized, to be opened up, to be hired.
When OBM approves those, and what is the time
from the posting of a position to
hiring an individual? Because I think that's you guys and HR.
Happy to do that. I will say that time to hire is less
about OBM approval and more about the time it takes to actually hire a
position. That has nothing to do with budgetary approval.
Oh, got it. That's why I'm asking for both.
I realize that some of the things that we're doing,
I'm looking for ways for us to get out of our own way to
hire these positions, especially those that are revenue generating at the end of
the day. Because looking at some of the numbers,
I think
maybe Alderman Beale and Alderman
Riley, very early on in the conversation today, started to ask questions about
specific
job categories. I'm just looking to make sure that we're staying on track
with those and making sure that all of the departments that are part of the
process are participating in a way that's productive.
Those were the only two real questions.
Everything else has already really been asked. So, I'll leave it there.
If I've got anything else, I'll just reach out to you guys separately because my
car just pulled up to the hotel,
and I'm going to lose my quiet space again. Thank you.
All right, enjoy yourself.
Alderman Hall.
Again, thank you so much,
Chairman. A few questions, and the reason is
to, again, get just clarity and
hope to get to a resolve. You said earlier,
Budget Director, that there were some things that
hadn't been done that were proposed in the budget, meaning the
calculator projection.
And so
did you get a chance
to review any of the revenues to the depth
needed to make
a
conclusive decision for '26
revenue projections? So did you get enough time with what was
proposed in this budget for revenue?
And-
Did I get enough time to... I'm sorry. I'm not sure I understand the question.
So this budget that we are trying to figure out how to get this $90
million deficit solved, right? We got here
because of a budget. My question is, did you get a chance to
review any of the revenues that were projected in this budget
before we put it up for a vote? To the degree of which there was
enough confidence that we could get it over, I mean, that we could get through the
year, especially without the position that we're in.
So essentially, the short version of the question is, did you have enough time to
really,
when it was given to you from
the other side, did you get enough time to really sit
with, and your staff work with the calculator to see if this budget would
be solvent?
What I will say is, more time is always better.
We
did an analysis in 48 hours because
of the timeframe of the budget process and the hearing schedule.
What I would say is that we had to do that analysis based
purely on a PowerPoint that was provided during a budget hearing
during city council. We were not afforded the ability to
talk to members of the coalition who proposed
those revenue sources, nor the people who advised them,
despite requesting to have those conversations.
So we had to essentially do that analysis based
on our understanding of the proposals,
looking at the management ordinances, and the ordinances for those
revenue sources,
the best that we could. What I will say is
our analysis is very close to what we're seeing actually play
out in these revenue sources today.
Right. And that playing out, meaning that clearly is playing out in the direction
of a $90 million gap. So,
to that end,
we hear essentially because the proposed budget that was
voted on wasn't strong enough, clearly.
Now, to that end, with all of the gaps in this budget that's leading to
2,000 people being laid off if we don't find
$90 million in revenue by August the 31st.
My question is, are we maximizing...
I got two areas, and I want to get to them quick.
Samsora was introduced to the city of Chicago. They had a conference here.
Samsora was this AI
company that we were in relationship with of
sorts, through efficiency management with
streets and sanitation and so forth and so on.
Where are we at with efficiency technology-
Yeah
... to begin to save money so that we can save
jobs? What do we have right now? If you don't know the answer, that's
fine. Could you send it to the chair?
This would be better to save time. Can you send to the chair all of the
efficiency subscriptions that we have, right?
That we are using to find, in this
area, number one,
the condition of our fleet. Number two, the
condition of our roads.
Number three, then also what
Does this technology lend to, as it pertains to, if it
does, but I remember seeing that it does, are we utilizing...
This is the second question within this one question, I guess.
Are we utilizing any technology on vehicles that
record when there's accidents or when there are
incidents of disruption, similar to what we would see on a bus?
Does any of that technology have that?
So to the Chair, again, if you can send over all of the subscriptions that the
city has towards any efficiency technology.
And then secondly, does any of the above technology
have surveillance that records activities
of any kind, disruptions of sort, on city vehicles?
My second question is when it comes to debt collection.
As has been noted by Chairwoman Dow,
that nobody
seemed to have went towards an effort to, at a conference,
buy the debt. It's been said time and time again that we put it out there, nobody
wants to touch it.
However, we are still collecting debt.
We're still collecting tickets, we're still collecting so forth and so on.
From 2015 to
2025,
can you send to the Chair
the amount of money that we collected?
And number two, what debt collection agencies that we
had. I want that sent to the Chair. Because I
mentioned that
I'm concerned, and this is a question-
Wrap it up
... Yeah, I appreciate that warning.
I'm concerned with the mechanisms
that we have and the firms that we have, what
role are they playing in this process currently?
So
maybe to the Chair, yes. Can you send to the Chair
what's the current debt collection agencies that we're using?
Because I'm concerned that we're not utilizing what we
already have in place to get whatever is owed to the
city. And so,
we've let go of Linebarger, which was the leader in
this. They were vindicated, and we haven't retrieved them, and I'm
concerned because in the data that I've seen in previous hearings as
such, we see that they were leading in collecting debt.
So, I just want to get a little bit more clarity through those questions through
the Chair, so that we can maybe find a better
way or more efficient way, or even if we need to change partners on
collecting debt. Thank you so much, Chairman. Thank you so much, Annette.
Thank you.
Okay. All right. I think
that's-
My questions are easy. Or at least if they're not easy, you don't have to answer
them.
So I know we had a conversation like seven hours ago
about the fund balance and the like,
considering we're a city with a
$16.7 billion budget, what kind of number
should we have in the fund balance?
Whether on a cash basis or accrual or anything like that.
We're nowhere near where we should be, I can tell you that.
And-
Is there kind of a rule of thumb in this regard-
60 days
... or anything?
Yeah, I'll let Steven answer the question, but the other thing I want to just...
So we're showing you the general fund balance. We have other reserves, right?
So we have our long-term reserves, too, so we don't want to discount the fact that
we have those. But Steven, do you want to talk about what the credit rating
agencies expect?
Yeah. Thank you, Annette. Thank you, Alder Conway, for the question.
So very roughly speaking, in long-term reserves, we have around
$630 million. Roughly speaking, that's about
10% of our general fund budget. The credit rating
agencies have their methodologies.
Many of them indicate to us, and this is the
methodologies,
that a 10% fund balance is consistent with our current general
obligation bond ratings, that in order to increase our credit
ratings, we need to do a number of things.
One of them would be increasing fund balance.
But to answer your very narrow question,
credit rating agencies consider our long-term reserves as part of this
broader concept of fund balance. It's about 10%, and that's
consistent with our existing geo credit rating.
And does that include our authorized and our unauthorized fund balance, or
is it something different entirely?
Is that-
So when I talk about long-term reserves, I'm talking about long-term asset and
lease concession reserve, again, about $630 million.
It's in one of the exhibits to the ACFR.
Okay.
Plus our general fund assigned and
unassigned fund balance. So all those three pieces together are what
the rating agencies
use to calculate what the city's fund balance is as measured against their
methodology.
Yeah. And my last question, just one from the ACFR
that jumped off the page when I read it.
It
was from the first page of the MD&A or whatever the
equivalent would be. It said the city's total assets increased by
$1.3 billion.
This increased primarily to a $2 billion,
$26016.5-- $2.2
billion increase in cash and cash equivalents associated with bond issuance
proceeds designated for future capital projects, as well as increased liquidity
in governmental funds. That's obviously a huge number if you could just talk about
what's driving that or what tied that to reality, I guess.
Alder, if it's okay with you, I'd like to go back to look at that section of the
ACFR-
Sure
... and dissect those various pieces and follow up with you through the Chair.
That's fine. I don't mean to give you any more work at this point in time.
It was just one, you see we got $2.2 billion worth more of cash.
I know that's not actually the case, so I had some questions on what that was.
You answered the question.
But usually that, there's a few statements.
You answered your question. It's bond proceeds.
Yeah, but we didn't issue $2 billion of debt
In that time?
There's three different
statements in the ACFR.
Mm-hmm.
And one of them is called government-wide.
So that looks at the entire enterprise.
So that's what that number's measuring.
Ah, okay.
It's all of our enterprise funds.
We have various governmental funds, including
the general fund. We have special revenue funds, et cetera.
So it's looking at the entire enterprise.
Great. That's all I have, and thank you all for sitting here for six hours
and giving us
some good information. Thank you.
All right. All minds are clear, or all minds are further
muddied, but be that as it may, I know that
this conversation is needed and necessary.
We have to make some decisions as a body.
We have to make some decisions as a city
if we want to continue down a path of maintaining a
decent financial footing, first of which is having a balanced
budget that will ensure that we
don't have to dip into those reserves, which I
think would have a catastrophic impact on a lot of things
that we know them to be. So again, I look
forward to a robust conversation as to how do we
manage our way back to
the black, and look forward for better
collaboration and on both sides so that we can do something that's
going to be beneficial to the taxpayers.
And I will end with-
I'm sorry, Chairman. You didn't see my hand.
Just real quick, where's the reserve amount at?
It's in the financial statements.
No, I'm saying the amount. What's the amount?
What's the long-term reserve amount?
It's what, 630?
Yep. It's approximately 630, and then you can add to that
the general fund balance as described, I think, in Exhibit 4.
So it's 630 plus
70 million, for 700 million in total, approximately.
About 700 million-
Thank you
... in total, Dave. Okay.
Thank you.
All right. So as we said,
we will
figure it out. He threw me off my train, so I'm going to
just stay off the train right now. So again, thank
you to the team for
coming in today.
I know that a lot of the conversation sometimes can be
viewed as a little tough,
but at the end of the day, I think we're all trying to get to a place
of benefit for the citizens of Chicago.
I tell people this all the time, there are several ways to get somewhere.
Hopefully we all get in the same bus and get there at the same time.
So there you go. That's the word of the day.
All right.
Six hours.
Six hours of that. Take a motion to adjourn.
Second.
So moved. All in favor, signify by saying aye.
Any opposed? The ayes have it, and we are adjourned.