Pension Bombshell: New Bill Could Devastate Chicago's Budget Amid $1 Billion Deficit
- Natalie Frank
- Jul 23
- 2 min read
A controversial pension bill on Governor Pritzker’s desk risks deepening Chicago’s fiscal crisis, sparking urgent debate over taxpayer costs and first responder benefits
Natalie C. Frank, Ph.D July 23, 2025
CHICAGO - Chicago is currently facing a major financial problem, with an expected $1 billion shortfall in its budget. A new pension bill, which is awaiting Illinois Governor JB Pritzker's signature, has raised serious concerns about the city's fiscal health. This legislation, passed quietly during the final hours of the spring session, would extend pension benefits for some police and fire department retirees, potentially straining the city's already fragile budget even further. The bill mainly targets Tier 2 workers, those hired after January 1, 2011, by raising the maximum pension-eligible salary and increasing annual cost-of-living adjustments (COLAs) for retirees.
Supporters argue these changes are necessary to correct retirement disparities, but critics warn that the financial consequences could be disastrous for Chicago's finances. Analysts estimate that the costs to taxpayers could reach $60 million by 2027 and swell to $754 million by 2055.
This projection has alarmed watchdog groups and financial advocates alike. Governor Pritzker responded on Tuesday, saying, “We’re still evaluating the bill. Obviously, there is a lot to consider here,”
Many civic organizations, including the Civic Committee of the Commercial Club of Chicago, the Civic Federation, and the Better Government Association, have publicly urged Pritzker to veto the bill. In their joint statement published in the Chicago Tribune, they asserted:
“Chicago and Illinois have among the most underfunded pension systems in the entire country. Taxpayers are on the hook for a combined state and local pension tab of $459 billion, or more than $90,000 per household.”
Pritzker has emphasized the complexity of the situation, emphasizing both the economic and human factors involved: “One thing to consider is the finances of the city of Chicago; how will they pay for it? Another thing to consider is these are our policemen, these are our first responders, and we want to make sure that they’re well taken care of.”
At the same time, Chicago Mayor Brandon Johnson, a former union organizer turned mayor, is navigating a delicate political environment. While supporting better retirement security for public workers, he urges caution regarding the bill’s fiscal impact. Johnson stated, “
“I’ve spoken to the legislature about my concerns about this particular bill,” Johnson said. “He’s what should or could still happen is that in our effort to secure retirement for our public employees, which is critical and constitutional, absent progressive review, it’s impossible to sustain that expectation.”
There’s widespread concern that if this bill is signed into law, it could set a precedent encouraging other Tier 2 workers across Illinois to seek similar pension improvements. Given that pension reform talks have been stalled in Springfield earlier this year, Chicago might soon face not only a budget shortfall but also a potential unraveling of its long-term financial planning.
All eyes now turn to the governor. His decision will be critical, potentially shaping Chicago’s economic future and reflecting the state’s approach, whether to continue down a path of mounting pension liabilities or to seek a more sustainable solution.
