The Illinois Policy Institute announced that Chicago is splitting its 2026 advance pension payment of nearly $260 million into two installments due to a cash crunch caused by delayed Cook County property tax distributions under Mayor Brandon Johnson’s administration.
According to the Illinois Policy Institute, the city faces insufficient cash reserves, with Mayor Johnson citing late property tax distributions as the cause of the delay. The city’s budget allocates $2.9 billion for pensions, which falls short of the $3.3 billion required to address $53 billion in unfunded liabilities, surpassing the debt of 44 states. This situation raises concerns about financial stability, as over 80% of property tax levies are directed towards pensions, and recent reserve usage for other payments indicates ongoing cash flow issues.
The Tax Foundation reports that Illinois has an effective property tax rate of 1.83% on owner-occupied homes, the highest in the nation. Chicago residents face rates contributing to financial strain. The Illinois Policy Institute highlighted that commercial property tax rates in Chicago are twice the U.S. city average, exacerbating revenue delays and pension funding challenges. This high tax burden coincides with significant outmigration as residents move to lower-tax states.
Equable Institute data reveals that Illinois public pension systems are funded at 52%, the lowest ratio in the United States, with Chicago’s plans significantly impacting this status. Nationally, other underfunded states include Kentucky at 54% and New Jersey at 55%, while well-funded systems like those in South Dakota exceed 100%. Chicago-area funds rank among the ten worst-funded local plans, reflecting broader challenges in managing public pension obligations nationwide.
The Illinois Policy Institute is a nonprofit research organization founded in 2002 that advocates for free-market solutions to policy challenges in Illinois, focusing on taxes, pensions, and government reform. It provides data-driven analysis to promote fiscal responsibility and economic growth through public education and policy recommendations addressing state and local issues.
