Chicagoans would pay higher taxes for liquor and rides with Uber and Lyft, along with significantly higher garbage collection fees, under alternative budget options unveiled Wednesday that do not include Mayor Brandon Johnson’s rejected corporate head tax proposal.
A small group of City Council moderates and conservatives finally showed their hand in an effort to, as Finance Committee Chair Pat Dowell (3rd) put it, “re-set the budget button on so that we can look at options other than the one that the mayor has proposed.”
“We haven’t proposed a budget. We’ve proposed alternative options,” Dowell said.
After declaring her opposition to the head tax “at any level,” Dowell said she is determined to produce a budget that does not include “borrowing for operations” or scaling back pension payments.
“I want the city to avoid a credit downgrade,” she said.
Scott Waguespack (32nd), who was ousted from his Finance Chair post by Johnson, called the substitute options he helped to craft an “alternative to killing off economic growth and jobs,” by imposing the head tax, which would be a $21 a month-per-employee tax on companies with 100 or more workers.
“The mayor is refusing to take recommendations and options from half the City Council. We need to put these options on the table to try and re-set the conversation,” Waguespack said.
The Chicago Sun-Times reported earlier this week that conservative and moderate alderpersons were racing to complete their alternative package amid concern that the longer they wait, the better Johnson’s chances of “peeling off” the handful of votes he needs to reach the 25 votes that would allow him to break the tie and put his 2026 budget over the top.
A garbage fee that has been frozen at $9.50 a month since its inception would rise to $18 a month to generate $55 million in annual revenue. The increase would be implemented incrementally over multiple years with eligible seniors paying just $9 a month. The garbage fee currently recoups just 20% of the city’s actual costs for refuse collection.
A liquor tax increase shelved a year ago amid heavy opposition from bars and restaurants would be revived, but only for “off-premise retailers.”
Instead of being taxed only on the number of gallons they sell, retailers that sell liquor in packages and by the bottle would pay an additional 3% on off-premise sales.
The additional levy is justified because those packaged goods stores “sell for consumption elsewhere at lower per-unit prices and in larger quantities, and their operations… correlate more strongly with… nuisance activity” that costs the city money by creating “disproportionate demands on policing, sanitation and code enforcement,” the alternative budget document states.
A downtown congestion fee zone that Johnson shrunk to appease a handful of alderpersons would be returned to its original and larger size. That would generate $48 million.
The proposed alternate budget would also restore the full advance pension payment that Johnson cut in half to avert another drop in the bond rating that determines city borrowing costs, shave $100 million from the $1 billion tax increment-financing surplus that the mayor hopes to use to rescue the Chicago Public Schools, and cancel plans to borrow $166 million over three years to help bankroll four years of retroactive pay raises for Chicago firefighters and paramedics.
Firefighters would still get their back pay. But borrowing to cover operating expenses would no longer be required by an alternate budget that includes $90.6 million in efficiencies outlined in the road map provided by EY, formerly known as Ernst & Young.
Those efficiencies include: a 15% reduction in the 772 vacant city jobs not tied to public safety; a 20% cut in the city’s ranks of middle management, and millions of dollars in savings by reducing health care benefits and increasing contributions from the city employees whose union contracts protect those benefits.
The alternate budget also counts on: $150 million from improved debt collections, $6.5 million by making technical changes to the city’s widely-criticized parking meter deal, and $26 million by licensing the use of so-called augmented reality that super-imposes digital content such as videos and interactive features onto a real world environment using smartphone tables or specialized glasses.
“The city of Chicago can generate revenue from AR by licensing the use of AR content or applications on city property like Millennium Park and the Riverwalk at city events such as parades and festivals,” the alternate budget documents states.
Chicago Federation of Labor President Bob Reiter did not slam the door on benefit changes. “It’s not something that they talked to me about… I have to look and see what they’re proposing and what things are subject to collective bargaining.”