Chicago is stepping in to lend cash to its underfunded pensions so they have enough money to avoid asset sales to cover retirement checks as they wait for property taxes to come in after a computer issue delayed collections https://t.co/NjYZMGlDs7
— Bloomberg (@business) September 16, 2025
Chicago’s money trees are shedding their autumn layers with a new multi-million dollar government payout package for underfunded public pensions. City officials approved a short-term bailout of the Firemen’s Annuity & Benefit Fund to the tune of $28 million to avoid forced asset sales. That is merely the tip of the iceberg, as Chicago’s pension debt has risen 15% over the past five years to an utterly unsustainable $36 billion.
Property taxes currently fund 80% of the city’s pension fund, but are not enough to sufficiently meet payouts. The average pension fund ideally has a funding level of around 70%, and funding beneath 40% is considered nearly insolvent. In Chicago, the top four public pension funds (fire, police, municipal, and laborers), along with the teachers’ pension fund, have a backing ratio between 24% to 43%, with the combined debt now exceeding $53 billion—all of Chicago’s public pension funds have gone bust. Reform measures have been bypassed for years to the point of no return.
Chicago’s pension system carries a debt larger than that of 44 states. Seven Chicago-area pension funds are among the top 10 worst-funded plans in the country. The city already allocates up to 20% of its annual budget toward pensions. Taxpayers are expected to meet all shortfalls, but again, the current level of taxation is not enough to cover the gap.
Lawmakers claim there was a mere system error. Property tax bills were expected to be sent out in June, but will not reach taxpayers until October. The $28 million is intended to act as a temporary band-aid, but the city is almost guaranteed to ask for additional loans and bailouts because the frozen funds are NOT the problem. These funds are a Ponzi scheme, robbing Peter to pay Paul, but the jig is up.
Lawmakers recently passed a bill to provide additional pay to Chicago’s retired firefighters and police officers. Politicians are permitted to pass bills to secure votes without actually having a plan in place. The city’s pension bill will rise to $2.76 billion by 2026. There is no money for other public services. Chicago has lost its ability to remain competitive as capital is fleeing increased levies.
Chicago’s overall property tax levy more than doubled in a decade, expanding from $860 million in 2014 to $1.77 billion in 2024. Pension costs directly have risen sixfold over that ten-year span from $478 million in 2014 to $2.75 billion in 2024. The city has redirected every penny collected from property taxes since 2014 into these failing funds, but the pension obligation has surpassed 160% of the annual property tax revenue.
The blame falls on the people rather than the failed politicians. Mayor Brandon Johnson proposed increasing property taxes by $300 million for the current fiscal year, which would mark the largest spike in property taxes in the city’s history. The measure was shot down by the City Council who instead plans to generate $165.5 million with additional taxes and fees in other domains.
In 2021, Mayor Lori Lightfoot demanded a $93.9 million increase in property taxes. Johnson actually campaigned against that measure, and Lightfoot was pressured to drop the tax hike to $42.7 million in 2023. Johnson was elected over Lightfoot for pretending to care about constituents and promising to lower tax burdens.
Their approach has failed. 41% of property taxes were injected into these broken pension funds in 2014 and increased to 80% in 2024. Property taxes more than doubled in that timeframe, but it is nowhere near enough to solve this crisis. Politicians will continue to rob the people with excessive levies to maintain the Ponzi scheme for as long as possible. It is only a matter of time before the city is unable to pay retirees.
The Illinois Constitution does not permit cities to file for Chapter 9 bankruptcy. The state has historically blocked any cuts to payouts regardless of liquidity. The city may one day be forced to beg for a federal bailout, which would force all Americans to pay for decades of reckless mismanagement by financially illiterate politicians.