The Great Recession’s Impact on the City of Chicago’s Budget

This research describes the Great Recession’s impact on the City of Chicago’s budget and financial decisions about revenues, spending, and borrowing. Although the city has reduced spending for personnel and other expense categories in response to the economic downturn, its significant off-budget reserves and executive power have permitted it to “kick the can down the road” instead of forcing it to make more difficult and necessary decisions. However, its position is even more precarious than in many other central cities because it had a long-term structural deficit for almost a decade before the recession started. The recent fiscal shock has exacerbated the city’s financial liabilities to a great extent and will have to be addressed at some point in the future to avert a financial crisis.