Pension Shortcomings are an Ancient and Systemic Issue

Cook County and Chicago currently have the worst pension situation in the United States. While Illinois in general is in trouble, it is Chicagoland that is in the direst of straits. 80% of all property taxes collected go toward public sector pensions, making them a giant albatross. As the “Edgar Ramp” continues to grind toward its apex in the next few decades, the situation is only getting worse. The city pensions have been underfunded for years, leading to a falling bond and credit ratings. The current mayor, along with the previous one, has been using advanced pension payments to help stem the bleeding, but this has done little. Currently, it is estimated that Chicago is in more pension debt than most entire states in the nation, with the Windy City having more debt than 44 states.

Chicago Advanced Pension Payments

Chicago has used a system of advanced pension payments over the past decade in an attempt to help stabilize the system. This is meant to be a proactive approach to funding the mammoth pension debt, which hopefully signals to financial organizations that the city is meeting its obligations and can keep bonds and credit in good standing. Chicago had been in a freefall in that regard, though recent advance payments have righted the ship somewhat. In 2024, $360 million was pumped into the pension system ahead of schedule, landing Chicago a nice bump in its credit rating. Putting funds into the system in times of plenty also means that there is room for error should hard times call for austerity. Hard times certainly surfaced in 2025, as it was a disaster when it came to property tax assessment, collection, and distribution.

After effects of Delayed Property Taxes Keep Spiraling

The delayed second installment tax bills in Cook County has caused a funding crisis that has hit all sectors of the county’s economy. Schools are still awaiting funding in many cases, and have been forced to take out loans, which have led to millions of dollars in debt being added to a growing tally. This has likewise spread to other government services. Funds that typically arrive in August finally started to trickle in during December, with January and February slated to see more flow into the coffers. These organizations will now need even more funds to pay the interest and loans back, causing more pain down the line.

This stoppage of cashflow also applies to the pension system, especially the advance payment of $260 million that was scheduled for January. Thanks to delayed funds, roughly half of this could be paid on time, with the other scheduled for later in the year. This, of course, will have the same knock-on effect that other delays have had on the city’s finances. It also casts a pall on the state of Chicago’s finances, as the advance payment was a key sticking point in the budget that was passed against the will of the mayor.

The Chicago Budget Crisis

Even before the computer issues and delayed tax bills, Chicago had a major budget issue. The No. 1 reason, of course, is the pension drain on the county, but there are certainly other issues. Falling occupancy and revenue from commercial properties, particularly the Magnificent Mile and the Loop, caused a budget shortfall, which was then placed upon homeowners to make up the difference. Many avenues to find new revenue streams were blocked, such as the mayor’s proposed head tax on corporate employees. The head tax would probably have made the situation in the Loop even worse, as it charged an extra tax for every employee at major companies.

Things grew so bad that Chicago faced its first government shutdown in history. This was narrowly avoided when the city council forced a budget over the head of the mayor, one he could have vetoed but chose not to. One of the key pieces of that budget was the advance payment for pensions, which would help rebuild Chicago’s falling credit rating, or at least keep it from sinking further. With the payment being broken up, members of the council and the city at large are wondering how solvent the city’s budget really is.

The Impact on Future Assessments and Tax Bills

Pensions are mainly funded by property taxes, which means that any shortfall must be made whole by coming from the pockets of property owners. Homeowners closed 2025 by seeing an average tax increase of 16%, though many neighborhoods saw their taxes double or worse. So far, there has been no progress in addressing these rising taxes. These rates have gotten so bad that even the iconic Chicago Bears are thinking of picking up stakes and moving to Indiana, as building a stadium might not be tenable. A “megaprojects” bill is being considered, which would give tax breaks to large construction projects. Though this could attract more businesses, it could also move even more of the burden onto homeowners. Plus, if the pension system falls further into debt, that means that either taxes must be raised or services cut.

O’Connor has Your Back

With the pension system being shielded with constitutional protections and growing dysfunction in government, it looks like the record property taxes in Cook County are here to stay. Since the government is unable or unwilling to bring about changes, the only way to deal with the coming fallout is to take matters into your own hands when it comes to your financial security. Make sure that you have every exemption possible filed, along with other options such as senior tax freezes. Once those options are squared away, you next need to focus on property tax appeals. A few townships are still offering appeals, but most efforts should be focused on the next assessment year.

While Cook County set records for appeals in 2025, the system can still be quite esoteric to newcomers. We at O’Connor can help in that regard by analyzing your assessment to look for any errors that you may have missed. If you need to pursue an appeal, we can gather the evidence needed, from home sale studies to property comparisons. With this vital information, you will have every advantage when you file your appeal. We help coordinate your appeal with an attorney, so that they can represent you in hearings. You will never see an upfront fee from us for this analysis or evidence, and you will only pay a contingency fee if you are able to lower your taxes.