Three days after the City Council shot down Mayor Brandon Johnson’s $300-million property tax increase, top mayoral aides have brokered a deal to cut the tax hike in half as negotiations continue.
The largest chunk of new revenue — $128 million — will come from raising the personal property lease tax on cloud computing to 11%.
Another $14 million would be squeezed out of “redundancies and efficiencies” in administrative costs tied to the spending programs bankrolled by federal pandemic relief programs in 2026 without laying off employees or disrupting programs.
And the final $10 million would be generated by raising the tax on streaming services from 9% to 10.25%. That would bring it up to the combined sales tax.
Last week, the City Council voted 50 to 0 to reject the $300-million property tax increase that would have broken one of Johnson’s fundamental campaign promises.
The unanimous vote was largely symbolic. Negotiations to reduce or eliminate the property tax increase and replace it with a healthy mix of new revenue and reprogrammed federal pandemic funds had begun days before.
But it was perhaps the strongest sign yet that Johnson’s anemic public approval ratings have emboldened the Council to seize control over the all-important budget process and stop taking its marching orders from the mayor’s office.
By brokering a package that cuts the $300-million increase in half, Johnson is attempting to regain control over the 2025 budget.
“The mayor is driving the bus. He’s the executive. … Whose team convened all of these meetings? Whose team put together all of the [10] revenue proposals? It was the mayor and a bunch of hard-working alders [who] made this possible,” a Johnson ally said.
But that begs the question: If the wildly unpopular property tax increase could be cut in half that quickly, how much lower could it go?
Ald. Anthony Beale (9th), who spearheaded the call for last week’s special meeting, said top mayoral aides still have “not talked to me or any of the other 14 people who signed onto that letter” calling the special meeting.
Beale was not satisfied with the $150-million cut.
“They’re looking for revenue instead of looking for fat and inefficiency,” Beale said Sunday night. “If they could cut the $300-million increase in half miraculously in a couple of days, it means they’re still trying to hoodwink the people of Chicago instead of making the spending cuts needed to put the city back on track.”
Southwest Side Ald. Marty Quinn (13th) predicted that it would be “very difficult” for Johnson to get 26 votes for “any property tax increase” let alone $150 million.
“I really believe you have to demonstrate to Chicago taxpayers that there are real reforms. Freezing salaries. Freezing new employees. That’s what Chicagoans want to hear. You’ve got to tighten it up a bit,”Quinn said. “There’s no way Chicagoans will be for a $150-million property tax increase. It’s not a big enough difference.”
Even Ald. Pat Dowell (3rd), Johnson’s handpicked Finance Committee Chair, was not satisfied with cutting the property tax increase in half. “I think we can go deeper,” Dowell said. She said she has given the mayor’s office “a lot of suggestions” on ways to cut spending and has not yet heard back on whether those ideas can be implemented. “One-hundred-fifty [million] is not satisfactory to me. A $150-million property tax [increase] is not something that I can support.”
Other Johnson allies would only say that negotiations continue and that $150 million has been cut “so far” and that the mayor’s office “wouldn’t be presenting this if it wasn’t a consensus package” capable of attracting the 26 votes needed for passage.
At a news conference following last week’s special City Council meeting, Johnson took the latest in a series of City Council defeats in stride.
“This is a healthy process. This is something that my administration can handle. I’m not intimidated by voices from individuals who are city leaders in their own respect,” the mayor said.
“This is a good thing for Chicago. It’s a new process. People will learn to adjust to it as we continue to move forward.”
Johnson said then that he had no doubt that the City Council would ultimately pass a balanced budget that negotiates the “details” while upholding his “values.” That is, it must confront the city’s structural deficit by avoiding what he called “one-time scoops” like reducing the $272-million pension advance. It must “invest in people” by supporting programs in long-neglected South and West Side communities. And the final budget must not “cut city services” by laying off city employees or imposing mandatory furlough days.
The mayor once again refused to identify alternative revenue he could support, except to say it must be “progressive.” Nor would he say whether a property tax increase of any size can or should be avoided.
Alderpersons who spearheaded the call for last week’s special meeting have accused the mayor of freezing them out of the negotiations to find an alternative to the now-failed property tax increase.
They are expected to push Johnson even further for cuts to the city’s redundant layers of middle management.
“If they’re able to retreat that quickly to a much lower number, how much better can we do if we continue to negotiate and force the question on cutting expenses and not talking about new revenue?” downtown Ald. Brendan Reilly (42nd) told the Sun-Times last week. “This mayor seems to think that every city job is an entitlement and that these are sacred cows that can’t be touched.”
A source close to the negotiations said Johnson “does not believe that the way you balance a budget is by laying off working people.
“The idea of [laying off] middle management people — what people are missing is those are union positions. So, you can’t just, at will fire people,” the source said.
“Those middle-management positions that people think are not protect by unions — they are.”
Pressed on whether a $150-million property tax increase is the best Johnson can do, the source said, “This is a package that we’re presenting, and we’re gonna continue working.”