Chicago mayors have grown accustomed to dictating the way the city raises and spends its money. But Mayor Brandon Johnson learned the hard way a year ago how much times have changed.
Johnson’s $17.1 billion 2025 budget squeaked through the City Council by a 27 to 23 vote after a protracted stalemate in which council members unanimously rejected his proposed $300 million property tax increase, and refused to support a property tax hike of any size.
On Thursday, the budget marathon starts all over again.
Johnson will stand before an emboldened City Council to outline his plan to erase a $1.15 billion shortfall after promising to deliver on his pledge to “challenge the ultra-rich” and corporations that benefited from President Donald Trump’s tax cuts to “pay their fair share in taxes.”
Ald. Andre Vasquez (40th), who marshaled opposition to Johnson’s 2025 budget, warned the mayor to prepare for another budget rewrite that includes deeper budget cuts to help make the case for higher taxes.
There will be no repeat of the days when predecessors Richard J. Daley and Richard M. Daley pitched shutouts on their budgets, and Rahm Emanuel managed to double Chicago’s property tax levy with only fifteen dissenting votes, Vasquez said.
“Those days are gone — and it’s a good thing they are. That was more about politics and power than about solving a math problem,” Vasquez told the Sun-Times.
“These are very difficult problems that you have to level with the public about. And that’s not what was happening under the Rahm or [Daley] terms when it was, `Here’s what it’s gonna be.’ That’s not the best way to govern. It’s also why we’re screwed now because of all the mismanagement back then.”
Revival of the head tax
Delivering on Johnson’s promise to challenge businesses to “put more skin in the game” will likely mean a revived, dramatically enhanced and rebranded version of the $4-a-month-per-employee head tax despised by business leaders as a “job killer.”
When Emanuel eliminated the head tax in 2013, it was generating roughly $20 million annually from more than 2,000 companies.
The Johnson-appointed Chicago Financial Future Task Force co-chaired by businessman Jim Reynolds and Chicago Urban League President Karen Freeman-Wilson projected that reviving the head tax at that same level would raise, at most, $25.6 million each year and perhaps less than half that amount.
But Johnson is expected to go big by proposing a dramatically higher-per-employee head tax with a new name. Business leaders are already mobilizing against it while continuing their behind-the-scenes search for a mayoral candidate to challenge Johnson in 2027.
With record office vacancies and a job market stuck in the mud, Chicagoland Chamber of Commerce President Jack Lavin warned that a revived, bigger head tax would “disincentivize businesses from employing people in Chicago and disincentivize businesses from coming or staying in Chicago.”
“This narrative that `business does not pay enough’ sends a negative message that Chicago is not open for business,” Lavin told the Sun-Times. “You’re making companies pay to hire people in Chicago. It’s bad for residents and jobs. We’re going to work with alders to fight this and we’ll see what happens.”
Downtown Ald. Brian Hopkins (2nd) said Johnson does not have the 26 votes needed to pass “a head tax at any level,” let alone a dramatically higher head tax.
“The problem he’s gonna have trying to cut deals is that a lot of the promises he made to get some reluctant ‘yes’ votes last time around haven’t really been kept. So, I don’t know how much credibility they’re gonna have when they start making promises the day of the budget vote,” Hopkins said.
A revived head tax won’t be the only source of new revenue included in Johnson’s 2026 budget.
Johnson’s other possible revenue sources
The mayor is expected to renew his push for a 1% grocery tax eliminated by the state and recommend a wide range of higher fines and fees. A second straight increase in the tax on cloud computing is also possible, even though last year’s increase — from 9% to 11% — faced heavy opposition from business leaders. Johnson may also seek to expand a $1.50 ride-hail “congestion” fee that triggered a refund from Uber for improper charges levied outside the mandated hours.
The two most powerful members of the mayor’s leadership team — Finance Committee Chair Pat Dowell (3rd) and Budget Committee Chair Jason Ervin (28th) — are leading the charge to revive the automatic escalator imposed by former Mayor Lori Lightfoot locking in annual property tax increases at the rate of inflation.
That would generate $56 million annually, according to the task force report. There’s potential to raise $52 million more if the city manages to negotiate voluntary “payments-in-lieu-off taxes” with hospitals, universities and other non-profits exempt from property taxes.
Johnson boxed himself in politically by ruling out a property tax increase days after Chief Financial Officer Jill Jaworski called it all but inevitable. But he may not have the final word.
A long overdue increase in the garbage collection fee that’s been frozen at $9.50 a month since its 2015 inception is also expected.
“I don’t see a world where the garbage fee isn’t raised,” Vasquez said. “Other municipalities are 20 to 40 bucks, while we’re at nine bucks. So, there’s definitely a gap that can be covered there to make it enough that it pays for the service because, right now, it doesn’t. ”
Ald. Mike Rodriguez (22nd) agreed that the City Council must close the “substantial gap” between revenues and actual garbage collection costs. But Rodriguez said he’s “not interested in taxing folks who can’t afford to pay.”
“Means testing, which would be creating either exemptions or tiered pay, makes a lot of sense,” Rodriguez said.
“That goes for every tax. Best practice for progressive revenue is means testing. Making sure that those who can afford to pay — pay.”
The task force report pegged the “high-end” take for increasing the garbage fee at $296.9 million yearly. Ervin has long been an outspoken critic of the garbage fee. He voted against it in 2015.
“I’m hopeful that it’s not included. I don’t think that goes along the line of a progressive revenue conversation. That is a regressive revenue source,” Ervin said.
Asked if he has the votes to stop it, Ervin said, “I don’t want to get to that point.”
Another big TIF surplus looms
Johnson is certain to steer clear of layoffs and furlough days, freeze hiring while exempting public safety jobs and declare another tax increment-financing surplus even bigger than the record $570 million surplus he declared a year ago. It’s likely to be an amount so high, it’ll allow the cash-strapped Chicago Public Schools, which gets a 52% share of any TIF surplus, to reimburse the city for a long-disputed, $175 million pension payment for non-teaching school employees.
CPS’ failure to reimburse the city for that $175 million pension payment prompted the city to fire now former Schools CEO Pedro Martinez because it forced two straight years of city deficit spending.
No matter what the mayor proposes and how the City Council rewrites Johnson’s budget, Ald. Byron Sigcho-Lopez (25th) said the push will intensify for a service tax, a corporate income tax and other forms of progressive revenue that can only be approved by the Illinois General Assembly.
That means turning up the heat on Gov. JB Pritzker to help insulate Chicago from billions of dollars in federal funding cuts to education, health care and transportation, Sigcho-Lopez said.
“This is an unprecedented time. It’s not OK to say, `You’ve got to deal with this alone.’ We cannot fight Trump alone. We’ve got to fight him together,” Sigcho-Lopez said.
“The governor has an obligation to lead in this moment, especially if he’s interested in going to the White House,” Sigcho-Lopez added. “This is the moment that he needs to give us… the ability to raise our own revenue. The governor is talking a good talk. But we need to walk the walk together.”