Several major blue cities in the U.S. have been marred by a slate of massive budgetary problems in recent years.
City officials in Chicago and Los Angeles are currently grappling with how to address substantial budget shortfalls. Meanwhile, Philadelphia is struggling with various financial issues across several sectors, with bothits school districtand theSoutheastern Pennsylvania Transportation Authority (SEPTA), the citys public transit system, facing massive budget deficits.
Chicago is facing aprojectedbudget gap of nearly $1.2 billion for fiscal year 2026. The citys budget deficit has largely been exacerbated bysoaringpension costs,decliningstate revenue and rising personnel costs.
Chicago has infamously bad finances, Dylan Sharkey, an assistant editor at the Chicago-based think tank Illinois Policy Institute (IPI), told the Daily Caller News Foundation. As far as the budget, it lays out power for the mayor and city councils, so for example, in some [Illinois] cities voters have to approve property tax hikes, and Chicagoans dont get to do that.
Chicagos personnel costs, including salaries, benefits, pensions and other expenses for city employees, will consume 63% of the citys corporate fund in 2025, totaling $3.53 billion,accordingto a report from the IPI.
Democratic Chicago Mayor Brandon Johnson signed anexecutive orderMonday to create a working group of civic organizations, financial experts, labor organizations, local business leaders and elected officialsto help tackle the citys budget gap.
This executive order is about bringing Chicagoans together so that we can continue the critical work of investing in our people, Johnson wrote in a press release. I have confidence in the collective wisdom and expertise of this wide range of stakeholders that will generate sustainable solutions to the challenges in front of us.
Illinois had $10,915 in pension liabilities per capita at the end of 2022,accordingto a December 2024 report from the Reason Foundation, a libertarian think tank.
When a city is in financial jeopardy, the state usually plays a role in helping out in the long term, Sharkey told the DCNF. But, unfortunately for Chicago, Illinois is broke too. A lot of it has to do with our [Illinois] pension spending.
Chicago residents have also faced a variety of struggles under Johnsons leadership, including rampantcrimeand a massivemigrant housingcrisis. Recentpollinghas shown that Johnsons approval rating among Chicagoans is at an all-time low.
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Democrat Los Angeles Mayor Karen Bassduring a State of the City address on Mondayproposedlaying off more than 1,600 government workers to close her citys growing budget gap. The citys budget crisis has notably been worsened bycostly litigation,wildfirerelief expenses and largepay raisesfor city employees.
Los Angeles has one unique problem relative to other blue cities which is it is suffering from the aftereffects of the wildfires in January, Marc Joffe, a visiting fellow at the California Policy Center, told the DCNF.
Relatedly, Los Angeles isgrapplingwitha widening budget deficit.Los Angeles City Administrative Officer Matt Szabowarnedduring a March 19 city council meeting that the citys budget gap is projected to reach nearly $1 billion dollars for fiscal year 2025-2026.
Blue cities do tend to spend a lot of money on a lot of different things, including DEI [diversity, equity and inclusion], so maybe there is something there for them [the City of Los Angeles] to cut [out of the budget], Joffe told the DCNF.
While Democratic Philadelphia Mayor Cherelle Parker said in a March 13press releasethat her citysfinances remain stable, she added that her citys financial situation is facing heightened risks.
The School District of Philadelphia is facing a projected budget deficit of roughly $300 million for fiscal year 2026, WHYYreported. The school district is planning to use 40% of its reserve fund to cover the budget shortfall, according to the outlet.
The districts budget gap has largely been exacerbated by decades ofunderfundingandrising costs, such as expenses related to charter school payments and employee salaries.
SEPTA has also been facing massive budget problems in recent years,with SEPTA officials warning in a September 2023presentationthatthe public transit service could head into a death spiralif it does not receive more state funding.
Scott Sauer, SEPTAs interim general manager, warned during an April 16 city council meeting that the mass transit system is facing a $213 million budget deficit beginning on July 1, NBC10 Philadelphiareported.
The transit agency released abudget proposalon April 10 that would require 45% in service cuts, sizable fare increases, workforce reductions and a 9 p.m. curfew for all rail services to address its massive budget deficit, claimingthat it is facing the budget shortfall due to a combination of the end of federal COVID-19 relief funding and increases in the day-to-day costs of providing service to customers.
The School District of Philadelphia, SEPTA,Johnsons office, Bass office and Parkers office did not respond to the DCNFs request for comment.
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