Mayor Brandon Johnson and his budget team briefed reporters on some of the reasons, but offered few specifics about how they plan to address it.
The mayor sidestepped the question of whether a property tax hike is on the table to help close the $982 million budget gap.
"This is just a forecast," Mayor Johnson said. "It's a moment in time, and so no decision will be made just based upon a forecasting. But what I will say is that I'm very much committed to our overall vision of investing in people."
Chicago faces massive budget shortfall: BGA weighs in
Johnson skipped the automatic property tax hike tied to inflation last year.
One alderman said Chicago taxpayers should prepare for one this year.
"For us not to get that revenue from last year was a mistake, and it was politics involved in that. And so they're going to ask for a property tax increase. I'd be shocked if they don't," 17th Ward Alderman David Moore said. "Don't think my constituents like that when they're talking about money for, whether it's a new fieldhouse, whether I got a senior who don't, can't get a roof and porch."
Alderman Jason Ervin, who represents the 28th Ward and is Budget Committee chairman, said there's always a way to avoid property taxes.
"The question is: Will we get the necessary support from our partners in government to make that happen?" he said.
Some of the deficit is blamed on increased labor costs and anticipated increases with a new firefighter contract that is being negotiated, and will include backpay.
Overtime for police and other departments is also a concern.
The city is also increasing its pension payments and anticipating a drop in revenue from the gas tax, with prices expected to go down
The mayor said he will work with stakeholders, including labor and the business community to come up with solutions.
"There are litany or plethora amount of options that are on the table that my administration will be exploring collectively," Mayor Johnson said.
The mayor would not tip his hand on whether he will look to video gaming or putting slots in the airports to help raise revenue.
But the city is looking at reinstating some fees and rates that were put on hold during the pandemic.
They are not, however, relying on the remaining COVID funds the city received or factoring in adding a city tax on groceries after the state tax goes away.
They are budgeting $150 million to deal with the ongoing migrant situation, the same as last year, despite the significant drop off in the number of people being bused to Chicago.
"As much as we are faced with challenges, it has not disrupted my vision to invest in people and especially the West and South sides of Chicago," Johnson said.
The budget team has made no determination of if there will have to be any cuts.
"There are a number of options that, you know, we will explore. What we're working to safeguard against is harm to constituents, to everyday people," Johnson said.
And though the city was able to close this year's previously projected deficit of $538 million, the revised forecast shows the city is still facing a $223 million deficit for the rest of this year. The cause is mainly blamed on the $175 million pension contribution due from Chicago Public Schools and a shortfall in corporate tax revenue.
The city is looking at several cost reductions to address the gap.
"We're evaluating all of the different tools in our toolbox, including looking at slowing down hiring, an outright hiring freeze, as well as reducing other non-discretionary spending, sorry, other discretionary spending that our departments have within the budgets," City Budget Director Annette Guzman said.
The mayor remains committed to his progressive vision for the city, but how he will pay for it remains unclear.
"The investments that we have made as a down payment, my vision and mission is still committed to, to moving those investments forward, while also repairing the damage that we inherited," Mayor Johnson said.
One watchdog group calls the situation very serious.
"The projected budget deficit this year, and in the next couple of years, are equal to or greater than the projected deficits during the pandemic. Except, there's no federal money to save us this time," said Joe Ferguson, with the President Civic Federation. "We can go about the solutions in a progressive valued way. If what we're talking about is a broad expansion of progressive programming. No, that's not realistic."
Budget cuts in many departments should be considered, Ferguson said.
"There is no silver bullet. And, unfortunately, this being Chicago, there's a lot of garlands around sacred cows and whatnot that people are going to feel like they can't go there. There can be no sacred cows anymore. It all has to be on the table," Ferguson said.
In the last 15 years, the only time a projected shortfall was worse was in 2021, during the pandemic, when it reached $1.2 billion.
The budget forecast is just the first step in the budget process, with a lot of work ahead, and a lot of tough decisions that the mayor and City Council will have to make.
The mayor will present a formal budget in October that has to be balanced.