With 30 days to break Chicago’s second straight budget stalemate, a small group of City Council moderates and conservatives are intensifying efforts to craft an alternate spending plan that does not include a corporate head tax.
The plan they hope to unveil later this week would likely hold the line on property taxes, but increase the $9.50 a month garbage collection fee that has been frozen since its 2015 inception.
Sources said the proposal could more than double the garbage collection fee — to roughly $20 a month — while exempting senior citizens.
Even at $20 per month, Chicago’s fee would still recoup just 55% of the city’s actual refuse collection costs and pale by comparison to the rate imposed by other cities and surrounding suburbs.
Mayor Brandon Johnson’s proposed $21 a month per-employee head tax on companies with 100 or more employees — shot down by the Finance Committee — would likely be replaced by Ald. Gilbert Villegas’ proposal to charge residents and businesses $1.25 for every package they have delivered.
Johnson’s proposal to raise the tax on cloud computing and equipment leases would likely survive, but at a level short of the 15% the mayor has proposed.
Slot machines at O’Hare and Midway airports could also be part of the mix as moderate and conservative alderpersons seek to restore the full pension advance payment and minimize borrowing for operating costs to avoid another drop in Chicago’s bond rating.
In reducing the city’s credit outlook to negative, S&P Global Ratings cited Johnson’s decision to dramatically reduce — to $120 million — the city’s annual pension advance over and above the state-mandated actuarial payment.
The shrunken pension advance is one of several one-time revenues that Johnson used to balance his third budget.
The mayor’s spending plan also includes a record $1 billion tax increment financing surplus to rescue Chicago Public Schools; a three-year loan to cover $166 million in back pay for Chicago firefighters and paramedics; and five years worth of debt to bankroll large settlements tied to allegations of police wrongdoing.
The $449 million in loans to cover day-to-day operations would cost Chicago taxpayers $50 million in interest over the life of those bonds.
“If the mayor’s budget proposal is passed, we will most certainly have a downgrade, which will make it harder in the years to come, laying more debt on our children to have to repay,” said 19th Ward Ald. Matt O’Shea, Aviation Committee chair and one of the architects of the alternate budget plan.
In addition to O’Shea, those working to craft a budget alternative include Alderpersons Nicole Lee (11th); Samantha Nugent (39th); deposed Finance Chair Scott Waguespack (32nd) and Ethics and Government Oversight Chair Matt Martin (47th). Finance Chair Pat Dowell (3rd) has been involved to a lesser degree, sources said.
The group is getting help from the Civic Federation, the Civic Committee of the Commercial Club and from several former high-ranking city budget and finance officials.
Johnson had hoped to put his budget to bed by Thanksgiving to avoid a repeat of last year’s budget stalemate that ended in a 27-23 vote the week before Christmas — and only after the City Council unanimously rejected the mayor’s proposed $300 million property tax increase and refused to raise property taxes by any amount.
Instead, the Thanksgiving holiday came and went with no visible sign of progress while work continued behind the scenes.
“There’s a group of aldermen working diligently to try to identify and formulate a plan that includes more cuts, efficiencies and different sources of revenue to counter the higher taxes, fees and borrowing in the current budget proposal we have,” O’Shea told the Chicago Sun-Times. “My concern is what happened last year, where the mayor made promises to select aldermen to secure their support. He needs a handful of aldermen to cave — and history [shows] that’s easily achieved. And that’s frustrating to the rest of us who are trying to protect taxpayers.”
In another effort to resolve the budget stalemate, the 15-member “Common Sense Caucus” that includes O’Shea is urging its Progressive Caucus counterparts to join it in designating six of its members to help craft an alternative budget.
“We need to fill the leadership void because we’re not getting direction or leadership out of the fifth floor” mayor’s office, said 9th Ward Ald. Anthony Beale, one of Johnson’s most outspoken City Council critics.
The mayor’s office had no immediate comment.
Progressive Caucus Co-Chair Maria Hadden (49th) said she is “willing to collaborate with anyone who is willing to work with us.”
But she said she’s skeptical about avoiding a head tax at some level.
“I don’t see a way of that happening without having some kind of property tax increase that’s directly harming our constituents, but all of this is a negotiation,” she said.