Mayor Brandon Johnson is returning to the “disreputable bad practices of the past” with a $16.6 billion proposed budget balanced with “unsustainable, short-term fixes” and nearly $600 million in tax increases that “send the wrong message to the business community” at a time when Chicago needs jobs and economic growth, the Civic Federation concluded in an analysis released Friday.
The taxpayer watchdog group’s analysis undercuts the underpinnings of Johnson’s 2026 budget — from the $1 billion tax increment-financing surplus he is using to bail out the Chicago Public Schools, to his decision to use the city’s share of that TIF surplus and other one-time revenues and borrowing to pay operating costs.
“It’s all on quicksand — the very quicksand that has us really up against it financially… when there is no help coming from Springfield. There is no help coming from Washington obviously,” former city Inspector General Joe Ferguson, who now runs the federation, told the Sun-Times. “There is seemingly no recognition that we’ve got to clean up our own house.”
To avoid making what the federation calls the “difficult decisions needed at the moment,” Johnson’s budget “continues a status quo widely understood as unsustainable and unacceptable, using some of the same disreputable bad practices of the past,” the analysis states.
The revised, $1.19 billion shortfall is eliminated “not through shared sacrifice between stakeholders, but with tax increases targeted at businesses and one-time revenue influxes and borrowing to pay operating costs.”
The mayor’s proposal to shrink by $117.8 million the advanced pension payment initiated by former Mayor Lori Lightfoot invites Wall Street rating agencies to drop yet again the all-important bond rating that determines city operating costs. It’s also a risky move, given the recent police and fire pension sweetener that added billions of dollars to the city’s long-term pension liability, the analysis states.
The laundry list of business taxes includes: a $21 a month per-employee head tax; a 27% increase in the tax on cloud computing; an increased ride-sharing fee in an expanded downtown area; a city tax on hemp products and online sports bets; an increased boat mooring fee and a tax on social media companies that the federation called “legally highly questionable” and will need to be resolved in court.
Although two city-ordered reports outlined dozens of cost-cutting options, the mayor’s budget “barely scrapes the surface” of those ideas, the analysis states.
The budget reduces the employee head count by 446 jobs, but only through an 11% reduction in the city’s 4,022 vacant positions.
“We don’t see furloughs. We don’t see tightened work rules that would even have us doing more with what we’ve got, let alone doing the same amount with less,” Ferguson said.
“We’re borrowing to pay… for the firefighters contract when… we were told that money was set aside… We’re borrowing for operating costs — the very sort of thing that has been broadly castigated as one of the key sins of the past… This just is not a path forward. It is a holding ground in a way that poses the prospect that, next year, we’ll be in a harder place.”
Ald. Jason Ervin (28th) declared this week that the mayor’s budget will not clear the City Council Budget Committee he chairs unless Chicago Public Schools agrees in writing to reimburse the city for a $175 million pension payment for non-teaching school employees.
But the Civic Federation analysis warned: “Absent a change in state law, the city is still legally required to cover” that cost.
“The city and CPS should work with the State of Illinois to resolve the legal and financial entanglements between the two governments. And if legal responsibility is assigned to CPS… the District should be afforded commensurate, dedicated revenue authority to cover the obligation,” the analysis states. “Until the entanglement issue is legally reset, the city should not assume reimbursement. Nor should CPS, which itself is in a fiscally precarious position, make any such payment.”
The mayor’s proposed budget does not include that long disputed, $175 million payment.