A disciplined bloc of conservative and moderate members muscled their alternative revenue package through the City Council on Friday — minus Mayor Brandon Johnson’s corporate head tax — with five votes shy of the veto-proof majority they would need to override a mayoral veto.
The vote was 29-19.
Prior to the final vote, mayoral allies introduced an alternative plan that would restore the already-rejected head tax, fully fund an advance pension payment and replace a $90 million debt collection plan that Johnson has branded “immoral” with a mix of other revenues, including a packaging fee and video gambling at Midway Airport. They tried to refer it to the Finance Committee, but it was shunted off to the Rules Committee instead.
The Council will meet again Saturday, presumably to take a final vote on the $16.6 billion 2026 budget and authorize the Johnson administration to borrow $1.8 billion for capital improvement projects, retroactive pay raises for firefighters and paramedics and massive police settlements and authorize the refinancing of $1 billion in existing city debt at reduced interest rates.
After that, the next move will be Johnson’s.
He must decide whether to veto a budget he said is $165 million out of balance and would set Chicago up for a midyear budget shortfall that would require layoffs, service cuts, tax increases or a painful mix of those three.
During a news conference that followed Friday’s meeting, Johnson continued to play cat-and-mouse on the question of the day.
Asked if he would veto a revenue plan he believes is wildly unbalanced and views as “morally bankrupt,” Johnson said, “That decision has not been made.”
The mayor said his alternative plan proves there is another way that restores the full pension payment and avoids “sticking it to working people” with outstanding city debts.
“Have you ever had a debt collector call you over and over and harass you? Do you know what that feels like?” he asked.
Now that Friday’s show of force has proven renegade alderpersons have 29 votes, they believe they would pick up another five votes in the unlikely event that Johnson vetoes the budget.
“Momentum is on our side,” said Ald. Marty Quinn (13th), a member of the renegade group. “Today was the first step of a two-step process….We’re heading in the right direction.”
Ald. Nicole Lee (11th) and former Finance Chair Scott Waguespack (32nd) did much of the heavy lifting in crafting and defending the alternative revenue plan.
Asked if she’s confident about a veto override, Lee said, “I hope that, if it comes to it, that my colleagues who are not currently in the coalition will see fit to keep the city running.”
Waguespack added, “The mayor led us to this fiscal cliff. If there is a shutdown, he wears the jacket for it. Today was the first step in really trying to prevent that from happening.”
Johnson has vowed repeatedly to do “whatever it takes” to avoid an unprecedented shutdown of city government that Chicago would face if the Dec. 30 deadline comes and goes without Council approval of a city budget.
But he has also condemned the plan to sell $1 billion in outstanding city debt to collection agencies.
The alternative revenue plan approved Friday embraces Johnson’s proposed 15% tax on cloud computing, but includes no corporate head tax and no increase in garbage fees.
It raises property taxes by $9 million for libraries and relies on $8.7 million in annual revenue by raising Chicago’s plastic bag tax by a nickel — to 15 cents a bag; $6.8 million by licensing newly legalized video gambling terminals and $6 million by taxing off-premise liquor sales.
The proposed liquor tax was cut in half — from 3% to 1.5% — to soften opposition from the hospitality industry.
An enlarged Downtown congestion fee zone is expected to raise $26 million, even after opposition alderpersons canceled plans to apply the city’s 10.25% amusement tax to rides on Uber and Lyft.
The proposal to lift the city’s ban on video gambling assumes that 80% of the 3,300 eligible establishments with off-premise liquor licenses will apply.
The package also includes $29.3 million in revenue by selling advertising on bridge houses, city light poles and city fleet vehicles, including street sweepers and snowplows.
The 15% tax on cloud computing and equipment leases — up from just 9% a year ago — is the big moneymaker at $416 million a year. It will fall heavily on business, but will be passed along to consumers, including Netflix customers.
An advanced pension payment that Johnson cut in half would be fully restored to $260 million. That $139.9 million increase would be bankrolled, in part, by finding $46.6 million in budget “efficiencies.”
The opposition group had hoped to scrap the mayor’s plan for a five-year, $166 million loan to cover retroactive pay raises for firefighters and paramedics, but ran out of money to pay for that decision.
Finance Chair and 3rd Ward Ald. Pat Dowell, whose opposition to the head tax triggered the Council mutiny, was the only alderperson to speak on the City Council floor to, as she put it, “put a fine point on the moment that we’re in today.”
Dowell noted that Chicago’s precarious financial position is “at a critical juncture,” adding, “We have emerged today with a budget plan that protects programs which are vital to those most in need while setting us on a right path toward a stronger fiscal future.”
She made it a point to thank her colleagues who “dedicated hundreds of hours and time” to craft a “financially responsible revenue ordinance that does not sacrifice economic growth or place a burden on our most vulnerable citizens to close this $1.2 billion gap.”
During a marathon Budget Committee hearing earlier this week, Chief Financial Officer Jill Jaworski was asked what would be worse for Chicago’s already reduced bond rating now just two notches above junk status: an unbalanced budget or a government shutdown. Without hesitation, Jaworski said a shutdown would be worse.