Emboldened by the Democratic sweep in Tuesday’s elections, Mayor Brandon Johnson on Thursday offered a fiery defense of the corporate head tax that Gov. JB Pritzker, business leaders and more than half the City Council are determined to either reduce or eliminate altogether.
Johnson cited victories by a slew of Democratic candidates elsewhere in the country — including fellow progressive Zohran Mamdani, now the mayor-elect of New York City — as good reason to stand his ground and “center our politics around people, particularly working people.”
“That’s what people ran on and that’s what they won on,” Johnson said. “They literally won on the model that we’re building here in Chicago.”
Pounding the podium and raising his voice during Thursday’s weekly City Hall news conference, a fired up Johnson said it is “absolutely frustrating” to have to defend a head tax that will, he claims, amount to “about a third of 1%” for affected companies when poor and working people “are crying out desperately for government to respond to the basic fundamentals” of living.
“People want government, and particularly Democrats, to stand up for working people. Why won’t we do that? This is freaking Chicago. We are the global capital of the world. Working class was defined here. And now you want to reshape our economy that capitulates to the ultra-rich at a time in which people are hungry, without homes, without access to transportation?” Johnson said.
“It is deeply disturbing … that we have leaders in this state that are prepared to defend millionaires and billionaires, and not the people in Austin and not the people in Roseland,” Johnson added. “The ultra-rich do not need defending. They already have their defender in chief. The ultra-rich are being defended by an authoritarian tyrant. Why are we standing alongside Donald Trump?”
The $21 a month per-employee head tax on Chicago companies with 100 or more employees has emerged as the most controversial element of Johnson’s proposed budget that includes $586.6 million in progressive tax and fee revenues to deliver on the mayor’s promise to “challenge the ultra-rich” and make corporations “pay their fair share.”
Opponents call the head tax proposal a job killer. In mid-October, Pritzker said the tax would make it “very hard to attract companies from outside of Chicago to come into Chicago, and harder for companies that are in Chicago to stay.”
Johnson disagreed, calling the tax mere “lunch money” for large companies, and said he was not willing to negotiate the community safety, violence prevention, youth jobs and recreation programs the $100 million in anticipated revenue would support.
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. That’s less than half of last year’s pension advance.
The credit warning means there is a 1-in-3 chance that Chicago’s bond rating would be dropped. S&P issued a similar warning during last year’s budget stalemate and followed through on it two months later, by dropping Chicago’s bond rating to just two notches above “junk bond” status.
The decision to cut the pension advance in half is a particularly risky move, given the recent police and fire pension sweetener that added billions of dollars to the city’s long-term pension liability, the Civic Federation has warned.
The record TIF surplus is just one of the 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 the Chicago Public Schools, stave off classroom cuts and bankroll a new teachers contract; a three-year loan to cover $166 million in back pay for Chicago firefighters; and five years’ worth of debt to bankroll large settlements tied to allegations of police wrongdoing, including to compensate shakedown victims of former police Sgt. Ronald Watts.
Johnson also defended his decision to set aside $50 million to acquire and rehabilitate the old Greyhound station at 630 W. Harrison.
Ald. Bill Conway (34th) said he discovered the mayor’s plan to siphon $35 million next year and $15 million in 2027 from the Canal-Congress TIF district while going over TIF reports, and questioned why the mayor was “hiding” the plan from the local alderperson.
But Johnson countered that there is “nothing surreptitious” about his approach. The mayor said he has been in regular communication about preserving a bus terminal that is a lifeline for 500,000 poor and working people, including pregnant mothers who travel to Chicago to have abortions prohibited in their home states.
“If alders believe that, for a citywide initiative as important as this one [that it’s appropriate] to have a veto, de facto sort of prerogative operation, then we’re gonna fundamentally disagree,” Johnson said. “I believe that, for citywide investments like this one, I have the opportunity to lead with conviction.”