Chicago’s FY2026 budget cycle marked one of the most consequential debates in recent memory, with an unusually assertive City Council challenging the mayor’s initial proposal and forcing substantive revisions. Additionally, the city faced a $1.2 billion deficit driven by rising personnel costs, pension obligations, anticipated decrease in federal support, and the end of several COVID-era funds. Yet despite the fiscal pressure, Chicago adopted a $16.6 billion budget that avoided the deep, across‑the‑board cuts to environmental protection and climate planning. In fact, the FY2026 budget strengthened environmental permitting and inspection functions, returning those duties to the appropriate Department of Environment, a top budget priority for the environmental community. Securing this structural change in a difficult fiscal year underscores that FY2026 is a meaningful win for environmental advocates and all Chicagoans.
While alderpersons ultimately passed appropriations that remained largely intact from the Mayor’s proposed budget (passed 30-18-2), the revenue portion incited the most debate and made headlines. The alderperson-led Alternative Revenue Ordinance includes the following environment-related provisions:
- Raises checkout bag tax from $.10 to $.15 and allows one cent to go back to the retailer, but still does not dedicate revenue to environmental programs such as recycling and plastic reduction
- No increase to garbage pickup fee
- Expands congestion zones for rideshare surcharges
- Expands Smart Streets Pilot program area further north, up from North Avenue & Ashland to Irving Park Rd & Ashland, and expands area further south, from Roosevelt & Ashland to S Archer Ave & Ashland and parts of McKinley Park and Bridgeport
- Sale of city-owned debt, including water, is expected to generate $89.6 million (You can see in the alternative budget team’s presentation starting at 1:15 )
Important Definitions
Corporate Fund – the City’s general operating fund, supports basic city operations and services, such as public safety, public health, transportation, and small business assistance.
Enterprise Funds (Sewer Fund, Water Fund, O’Hare and Midway Airport Funds) – support the operation, maintenance, and capital investments of the City’s water and sewer systems and its two airports. They are self-sustaining, generating revenue through user fees and service changes that will appear on your receipt or on utility bill.
State Revolving Fund (SRF) – Illinois’ main low‑ or no‑interest loan program that helps municipalities pay for lead service line replacement.
Priorities in 2026 – actions City Departments intend to advance in the coming year; these are Department‑generated, not IEC or advocate‑driven. These are pulled from the City of Chicago Budget Overview.
Below is a summary of environmental-related department appropriations outlined in the FY2026 Budget.
Department of Environment (DOE)
What they do: The DOE advances equitable climate and environmental policy across all city sectors and departments, guided by the Climate Action Plan, which outlines actions to reduce Greenhouse Gas emissions 60% by 2040. Additionally, the Department is responsible for securing federal and state funding for climate infrastructure projects. The FY2026 budget returns real power to the DOE by transitioning existing inspection, enforcement, and planning roles from other departments to the Department of Environment and creates a new Office of Environmental Permitting and Inspection.
Passed Budget: $52,458,895, up from $2,399,239 in the FY2025 budget. Most of this boost comes from a $43.5 million federal grant dedicated to the Anadarko Superfund Site. Disregarding this fund $3.17M increase, most of which resulted from 65 positions transferred from the Chicago Department of Public Health (CDPH) and Fleet and Facilities Management (2FM) to the DOE.
Accomplishments in 2025
- Introduced the Hazel M Johnson Cumulative Impacts Ordinance to address environmental burdens and stressors disproportionately placed on Black and Brown, low income communities
- Secured $2.2 million in federal dollars associated with the Energy Efficiency and Conservation Block Grant formula funds
- To date, the Climate Infrastructure Fund has awarded 50 grants to nonprofits and small businesses to fund projects like renewable energy installations, energy efficiency upgrades and green infrastructure
- Supported the Department of Housing in the rollout of Green Homes Chicago, the retrofit program for 1-4 unit homes
Priorities in 2026
- Pass an updated franchise agreement
- Support Department of Water Management’s Green Stormwater Infrastructure Strategy
- Create dashboard to monitor city’s greenhouse gas inventory
Department of Public Health
What they do: Provides guidance, services, and strategies to protect Chicagoans’ health, including disease control, mental health, substance abuse, violence prevention, food protection and environmental permitting, and inspections.
Passed Budget: $335,049,660, a significant drop from $539,054,471 in the FY2025 budget. This is primarily due to a continued decline in grant funding, especially COVID-19 dollars.
Accomplishments in 2025:
- Responded to 2,541 out of 2,638 (97.7%) environmental complaints from January to July 2025
Department of Water Management
What they do: Operate and maintain the City’s sewer and drinking water infrastructure. The Department collects, processes, and distributes the City’s drinking water to residents and 120 suburbs. Most notably, they oversee lead service line replacement and are developing the Chicago Green Stormwater Infrastructure Strategy that sets an equitable vision and measurable goals for citywide green stormwater infrastructure.
Passed Budget: $774,039,573, up from $417,185,283 in FY2025. This increase largely comes from a $318.2M infusion of Community Development Block Grants Recovery Funds (CDBG-RF) to support long-term recovery of neighborhoods impacted by the 2023 and 2024 floods. Additionally, there are increased Water and Sewer Fund appropriations toward Bureau of Operations & Distribution and Bureau of Pumping Stations personnel, although an overall net zero positions compared to FY2025 budget.
Accomplishments in 2025
- Executed a funding agreement with the Metropolitan Water Reclamation District of Greater Chicago (MWRD) that will provide $6M for Combined Sewer Wing Storage projects. Once completed, the projects will store 1.5M gallons of sewer water
- Completed roughly 5,000 lead service line replacements
- Secured $14M in State Revolving Fund (SRF) funding for lead service line replacements on the South Side
- Completed the first combined water main replacement/sewer main replacement/lead service line replacement pilot. Implemented on a wide scale, it could speed up LSLR and reduce construction disruption
Priorities in 2026:
- Complete 8,000 lead pipe replacements
- Begin designing a new West Side Trunk Tunnel sewer to the MWRD Tunnel and Reservoir Plan (TARP) to provide additional sewer relief to the West Side of Chicago
- Use the investment of $318M of Community Development Block Grant – Disaster Recovery (CDBG-DR) funds to perform sewer grid cleanings, install new local sewer mains, resurface streets, and replace lead service lines
- Replace 12 miles of water mains and six miles of sewer mains, both with lead service line replacement
Department of Transportation
What they do: Maintain and improve Chicago’s transportation infrastructure, including streets, alleys, sidewalks, ADA ramps, and bikeways. The Department also coordinates freight infrastructure planning, policy, and implementation.
Passed Budget: $1,837,522,563, slightly down from $2,039,303,751 in FY2025. CDOT received a $67M influx of CDBG-DR disaster relief funding and increased appropriations from the Federal Grant Fund–mostly U.S. Department of Transportation grants with some carryover from FY2025.
Accomplishments in 2025
- Resurfaced over 150 miles of streets, installed 7,500 ADA ramps, and completed 50 green alley reconstructions
- Influx of $67M dollars Transit Signal Priority (TSP) pilot program that would improve transit reliability
- Completed streetscape improvements along 5 commercial corridors, improving walkability and traffic safety
- Installed 50 speed cameras across the city
Priorities in 2026
- Utilize CDBG-DR funding for long-term recovery from storm damage in 2023 and 2024 by constructing 60 permeable alleys across the city
- Construction of the new State/Lake CTA station
- Implement a Transit Signal Priority (TSP) pilot program
Department of Streets and Sanitation
What they do: Beyond street cleaning, snow removal, and rodent control, this department oversees residential waste, recycling for single-family and 2-4-unit multi-family homes, composting, and is responsible for the planting, removal, and maintenance of the City’s tree canopy.
Passed: $349,888,561, a slight decrease from $352,858,177 in the FY2025 budget.
Accomplishments in 2025
- Planted 1,833 trees. 64,452 total trees planted toward the City’s 75,000- tree goal within five years. We expect to see continued tree planting.
- Expanded composting sites
Priorities in 2026
- Implement a citywide tree inventory to provide real-time data on tree condition, location, and species, thereby improving tree-care resource allocation
- Pilot carbon dioxide rodent control method in green spaces
Department of Planning and Development
What they do: Manage economic development initiatives, administers city’s zoning laws, and implement sustainable growth initiatives and policies that foster climate resiliency. They oversee roughly 10,500 city-owned vacant lots, which can be used for open green space, urban agriculture, or green stormwater infrastructure.
Passed Budget: $146,482,815, down from $132,499,758 in FY2025. The dip is due to a significant loss in grant funding, especially the American Rescue Plan Act (ARPA) funding, which came to an end.
Priorities in 2026:
- Invest $5M in CDBG-DR funds for construction of five to six Permeable Outdoor Plazas (POPs!) to help with urban flooding
Department of Buildings
What they do: Enforce Chicago’s Construction and Energy Transformation Codes, oversee construction, demolition, and repair permits, and conduct annual technical inspections of buildings and businesses. This Department is critical for building electrification.
Passed Budget: $39,368,146, roughly in line with $39,704,856 in the FY2025 budget. There’s a slight decrease in appropriation from the city’s Federal Grant Fund to the department.
Priorities in 2026:
- Updating the permitting and inspection system
Department of Law
What they do: Manage Litigation, transactional, and legislative projects on behalf of the City. Additional DOL drafts, reviews, and advises the City on federal, state, and local legislation.
Passed Budget: $47,954,637, a slight bump from $45,918,684 in FY 2025 budget, mostly due to increased appropriations from the Corporate Fund.
Accomplishments in 2025:
- Brought a lawsuit against six oil and gas corporations and the largest trade association representing the fossil fuel industry for deception about the climate damage caused by their products
Priorities in 2026:
- Work with Department of Administrative Hearings to expand electronic filing for water debt and wage garnishment cases
- Expand the Department’s capacity to file strategic lawsuits to safeguard the rights and civil liberties of Chicagoans
Department of Fleet and Facility Management (2FM)
What they do: Manage and maintain city vehicles, equipment, and properties, duties previously under the AIS Department. The Department plays a significant role in the city’s electric vehicle procurement and charging infrastructure.
Passed Budget: $503,454,074, down from $557,363,694 in FY2025. This is largely due to the elimination of its vehicle funding, decreased funds for office and building maintenance, and movement of environmental duties and grants to the Department of Environment, including $41.9M dedicated to the Anadarko Streeterville Removal Superfund.
Accomplishments in 2025:
- Grew the department’s Green Fleet–1385 hybrids, 80 plug-ins, 247 EVs, 14% increase from last year, as of October 2025
- Purchased 60 EVs, which include heavy-duty vehicles, including refuse and street sweepers
- Installed rooftop solar panel systems at Humboldt Park and South Chicago library branches
Priorities in 2026
- Continued vehicle electrification will be supported by the roughly $7,317,300 Chicago received in late 2024 through the USEPA Clean Heavy-Duty Vehicles Grant Program, which will carry over into 2026, though no additional funding is expected next year
- Utilize $615k from the US Department of Energy’s Efficiency and Conservation Block Grant Program to reduce energy use, lower emissions, and invest in clean energy solutions across buildings, transportation, and community infrastructure.
- Move grants and environmental engineering personnel from 2FM to DOE, starting in March 2026
Department of Procurement Services
What they do: Responsible for procuring the city’s goods and services. IEC affiliate members and Chicago-based organization, Neighbors for Environmental Justice, released a report earlier this year highlighting DPS’s significant role in awarding contracts to vendors, including those that may violate the contracts’ environmental requirements for reporting and compliance. It should be noted that, currently, no city department enforces or monitors these requirements, and there are no consequences for vendors failing to meet them.
Passed Budget: $13,923,365, slightly up from $13,905,122 in FY2025.
No 2026 Environmental Priorities Listed
Budget Resources
Pg 2-3 Summary of Estimate Tax and Non-Tax Funds from which Appropriations are made
Pg 2-5 Summary of Appropriations from Funds by Purposes