The 2020 shortfall has grown to nearly $800 million, the mayor said.
"Make no mistake. This will be our pandemic budget," she said.
Lightfoot said revenue loss from COVID-19 accounts for 65 percent of the city's budget gap, with tax receipts plummeting from lack of tourism, as well as restaurant, hotel and convention businesses.
The mayor also said recent looting has hit small businesses hard, and bridging the fiscal chasm will require another round of federal funding.
"The federal government simply must step up and support our cities and states with additional stimulus dollars critically needed by our families and businesses," Mayor Lightfoot said. "We are in a crisis unlike anything experienced in our lifetimes. This should not be up for debate. I know this is campaign season, but this is not a red versus blue state issue."
Without help from Washington, Lightfoot said the city faces "painful choices," including the likelihood of layoffs, but added property tax hikes and layoffs are a last resort.
"I will do everything I can to prevent layoffs, but the reality is stark and our options in this fiscal crisis are limited," Lightfoot said.
"I think it's going to be deep cuts in services no matter what," said Laurence Msall, president of the Civic Federation. "If the federal government does not provide revenue support, it's going to be deeper than is necessary."
The mayor also added that budgeting for public safety next year will mean funding for both the Chicago Police Department and community support structures.
The mayor said she'll take a hard look at police overtime and other aspects of the CPD budget, but said defunding the police is not the answer.
In order to bring in revenue, Lightfoot called for the need for a casino surrounded by a "world class entertainment district."
Mayor Lightfoot was joined by Budget Director Susie Park, CFO Jennie Huang Bennett, and Comptroller Reshma Soni for the announcement.
The mayor's office said there will be a series of town halls scheduled to air from 6-7 p.m. this week on Facebook Live. Lightfoot is urging residents to participate in those town halls to work on ways to balance the city's budget.
The schedule will be:
-Monday, 8/31: State of the Budget with Susie Park, Budget Director; Jennie Huang Bennett, Chief Financial Officer; and Alderman Pat Dowell, Chairman of the City Council Committee on the Budget and Government Operations
-Tuesday, 9/1: Public Safety with Susan Lee, Deputy Mayor of Public Safety; Deputy Superintendent Barbara West, Chicago Police Department; and Executive Director Annastasia Walker, Office of Public Safety Administration
-Wednesday, 9/2: Human Services with 1st Deputy Commissioner Brandie Knazze, Department of Family and Support Services; Commissioner Dr. Allison Arwady, Department of Public Health; and Commissioner Rachel Arfa, Mayor's Office for People with Disabilities
-Thursday, 9/3: Infrastructure with Commissioner Randy Conner, Department of Water Management; Commissioner John Tully, Department of Streets and Sanitation; and Commissioner Gia Biagi, Department of Transportation
-Friday, 9/4: Neighborhood and Economic Development with Commissioner Maurice Cox, Department of Planning and Development; Commissioner Marisa Novara, Department of Housing; and Commissioner Rosa Escareno, Department of Business Affairs and Consumer Protection
The city has also created a website for residents to submit questions about budget issues at www.chicago.gov.2021budget. The city will also launch a grassroots effort in order to get feedback from the youth, Latinx and African-American communities, with budget ambassadors organizing and facilitating one-hour virtual or in person groups from September 7-20.