Chicago’s Finances in 2024: Where the Money Comes from and Where It Goes

A city taxed to the limit, further taxes will depress economic growth

In 2024, the City of Chicago operated with a total budget appropriation of approximately $16.65 billion, supporting everything from police services and pensions to airports, libraries, and infrastructure. Despite its economic strength and broad tax base, the city faces ongoing structural deficits and some of the steepest debt and pension obligations among major U.S. cities. This article offers a full fiscal snapshot, showing how Chicago raises revenue, how it spends, and which taxes are tied to which services.

General operations: $4.723 billion

Chicago’s Corporate Fund is its primary general operating budget, covering public safety, streets and sanitation, city administration, and more. In 2024, it was appropriated at $4.723 billion.

Funding sources:

• Utility/telecom taxes: $407 million
• Sales tax: $96 million
• Transaction taxes (lease, real estate transfer, cloud services): $796 million
• Transportation taxes (rides, parking, fuel): $403 million
• Recreation taxes (amusement, hotel, restaurant): $344 million
• Business taxes (bags, cannabis, bottled water): $155 million

Combined, these taxes delivered approximately $2.2 billion. The rest came from state shared revenues, fines, fees, and internal transfers.

Pensions: $3.55 billion

The city’s four pension funds — Police, Fire, Municipal, and Laborers—demanded a total contribution of $3.55 billion in 2024. This includes $2.749 billion through dedicated property tax levies and another $801 million from the Corporate Fund.

Debt service: $798 million

Debt service costs across all city funds — including the Bond and Interest Fund, Library Note Fund, and Corporate Fund — reached $798 million. Roughly $482–$515 million of this was paid from a dedicated property tax levy, with the balance from the Sales Tax Securitization Corporation and Corporate Fund.

Water and sewer: $1.392 billion

Chicago’s water and sewer operations are self-sustaining enterprise funds. In 2024, water services were budgeted at $951 million and sewer at $441 million, totaling $1.392 billion. These are fully funded by user fees (e.g., $4.55 per 1,000 gallons of water and $2.51 per 1,000 gallons for sewer).

Airports: $2.134 billion

O’Hare and Midway International Airports operated with a combined $2.134 billion budget. This is funded by airline rents, landing fees, and federal passenger facility charges. These enterprise funds are legally and financially independent of local tax revenues.

Vehicle services: $267 million

The city’s Vehicle Tax Fund supports vehicle-related operations and equipment (e.g., snowplows, salt, tree-trimming). In 2024, it operated with $267 million, mostly supported by the wheel tax (vehicle sticker fees).

Motor fuel projects: $149 million

Funded by state-distributed motor fuel taxes ($0.34 per gallon), Chicago’s Motor Fuel Tax Fund was appropriated at $149 million. These funds are restricted to road and bridge improvements.

Libraries: $267 million

The city budgeted $145 million for library operations and $122 million for related debt service, for a total of $267 million. These are fully funded by a dedicated property tax levy and associated debt service transfers.

911 and emergency communications: $184 million

Chicago’s 911 system is funded primarily by the $5/month phone surcharge and a seven percent prepaid wireless fee. The system’s budget in 2024 was $184 million, supporting dispatchers, call center operations, and infrastructure.

Special events and tourism: $65 million

Tourism and special events (e.g., Taste of Chicago, neighborhood festivals) were funded with $65 million, sourced largely from the hotel operators' tax (one percent city share) and a six percent home-sharing surcharge (e.g., Airbnb).

How it all adds up

In total, Chicago’s 2024 spending — function, amount, and primary source revenue — was split as follows:

• Corporate Fund (ops), $4.723B, utility, sales, transaction, transportation, recreation, business taxes
• Pensions, $3.55B, property tax (dedicated levy)
• Debt Service, $798M, property tax and STSC transfer
• Water and Sewer, $1.392B, User fees
• Airports, $2.134B, airline fees and federal PFCs
• Vehicle Services, $267M, wheel tax and impounds
• Fuel/Street Projects, $149M, state fuel tax (restricted)
• Libraries, $267M, property tax (library levy)
• 911 Services, $184M, phone surcharge and telecom tax
• Tourism/Events, $65M, hotel tax and home-sharing surcharge

Total (net of transfers): ~$13.5 billion

Note: The full city budget includes internal transfers and intergovernmental accounting that increase the appropriation total to $16.65 billion.

Tax structure overview

Sales tax (10.25 percent)

• State: 6.25 percent
• Cook County: 1.75 percent
• City of Chicago: 1.25 percent
• Regional Transportation Authority (RTA): 1.00 percent

Property tax

• Used primarily for pension contributions and debt service
• 2024 property tax levy: $1.774 billion to pensions; another $500M+ to debt

Transaction taxes

• Include real estate transfer tax, lease tax, and cloud software tax (all ~nine percent)
• Together, contributed ~$796 million to the Corporate Fund

Utility and telecom taxes

• Charged on electricity, gas, water, and phone services
• Generated ~$407 million in 2024

Transportation taxes

• Include ground transport tax, rideshare surcharges, parking taxes, fuel taxes
• Produced ~$403 million

Recreation taxes

• Include amusement tax (nine percent), hotel tax (one percent local share), restaurant tax (0.5 percent)
• Totaled ~$344 million

Business taxes

• Bottled water tax: $0.05 per bottle
• Checkout bag tax: $0.07 per bag
• Cannabis excise and cultivation taxes
• Combined, raised ~$155 million

Bottom line

In 2024, Chicago relied on a complex mix of local taxes, user fees, state and federal transfers, and enterprise revenues to fund nearly $16.65 billion in public services. Local taxes covered roughly $2.2 billion of the $4.7 billion Corporate Fund, with the rest made up from fees, intergovernmental revenue, and transfers. Property taxes — once a general revenue tool — now flow almost entirely to pension and debt obligations. Enterprise operations like airports and water/sewer remain fee-funded and self-supporting.

The city’s fiscal structure reveals both resilience and risk. While diversified taxes provide revenue stability, heavy reliance on property taxes for legacy costs, high debt service (17 percent of spending), and a still-unbalanced Corporate Fund (with a projected gap in 2025) all signal structural stress.

Sustainable fiscal health will require careful balancing of new revenues, pension discipline, and spending restraint across departments. Spending restraint and pension discipline seem like longshots at best. Any new revenues on the edges won’t raise much money and any major revenue ideas could cripple Chicago’s growth.