A city budget is essentially a financial roadmap for your local government. It’s a detailed plan that outlines how much money the city expects to receive (its income) and how it plans to spend that money over a specific period, usually a fiscal year.

An example of how Chicago manages their city budget process, as explained on their website, can be seen above.

Even with meticulous planning, changes in needs and costs of services can lead to funding gaps. As reported in a Chicago city government press release, Mayor Brandon Johnson stated that “The 2025 Budget Forecast presents a significant challenge for our City, with a nearly $1 billion gap that we must address thoughtfully and strategically”.

So you can think of a city budget like your household budget, but on a much larger scale, dealing with millions or even billions of dollars. And much, much bigger debts.

Where Does the Money Come From? (City Income)

Just like you may have a salary, paycheck, or gig income, cities have various ways to bring in revenue. According to the Government Finance Officers Association (GFOA), these are the largest sources of city revenue, or income, collected:

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