Facing Donald Trump's 'fund threat', Chicago turns to EY

Chicago is reportedly taking significant steps to address a looming financial challenge, engaging the global professional services firm Ernst & Young LLP (EY) to identify cost-saving measures and strategies to bridge projected budget deficits exceeding $1 billion in each of the next two fiscal years. This move underscores the growing fiscal pressures facing the city under the leadership of first-term Mayor Brandon Johnson, who recently completed his second year in office.According to a report in Bloomberg, the engagement of EY signals a proactive approach by the Johnson administration to tackle these substantial budget gaps. The consulting firm will work in tandem with a newly established working group, co-led by Jim Reynolds of Loop Capital, to develop comprehensive recommendations aimed at bolstering Chicago's long-term financial stability. This collaborative effort suggests a broad strategy involving both external expertise and local financial acumen.Mayor Johnson's administration is navigating a complex economic landscape, marked by a slowing national economy. Adding to these domestic pressures are potential external threats, notably President Donald Trump's stated intention to potentially withhold federal funding from state and local governments that do not align with his policies. This threat creates a significant layer of uncertainty for Chicago's budget planning, as the potential loss of federal funds could exacerbate existing deficits and necessitate difficult decisions regarding city services.Chicago is not alone in facing this predicament. Several other major metropolitan areas with Democratic mayors, including Boston, Denver, and New York City, are grappling with similar economic headwinds and the potential for federal funding cuts. If President Trump follows through on his threats, these cities could be forced to implement austerity measures, potentially impacting essential services that their large urban populations rely upon. This shared challenge highlights a broader tension between federal policy and the fiscal realities of major urban centers.The composition of the newly formed working group reflects a multi-stakeholder approach to finding solutions. According to a city statement released on Friday, the panel will include representatives from labor unions, prominent businesses such as Microsoft Corp. and Alphabet Inc.’s Google, and various civic organizations. Furthermore, several members of the Chicago City Council will participate as part of an advisory group within the broader panel, ensuring legislative input and buy-in for the eventual recommendations.Chicago's Chief Financial Officer, Jill Jaworski, told Bloomberg that the engagement of EY is specifically aimed at identifying operational efficiencies and exploring ways to improve governmental processes. She emphasized that the findings from EY's analysis will directly inform the budget proposals put forth by the Johnson administration.This announcement followed a recent investor conference held in Chicago, where city officials provided briefings on the city's financial situation. Notably, this year's investor conference was closed to the media, a departure from past practices. This decision prompted a letter of concern from more than half a dozen news organizations, including Bloomberg News, to CFO Jaworski, requesting access. The media outlets argued that such events are crucial for public understanding of the city's financial priorities, health, and economic outlook. They asserted that closing the conference to the press undermines the transparency that residents and taxpayers deserve, particularly at a time when significant decisions regarding debt, investment, and budget strategy are being made. This lack of transparency raises questions about public access to information during a critical period of fiscal planning for the city.