Mayor Brandon Johnson is offering a series of concessions in hopes of salvaging his proposed $16.6 billion budget, but it’s unclear whether the changes he has made will get him to the 26 votes needed for City Council passage.
Facing fierce opposition from Gov. JB Pritzker and business leaders, Johnson has offered to impose a $21 a month per-employee head tax only on businesses with 200 or more employees instead of on companies with at least 100 employees.
The $18 million revenue loss from that change would be made up by raising the personal property lease tax on cloud computing and software higher than Johnson initially proposed.
Instead of 14%, the tax on cloud computing would be raised to 15%, which would generate about $416 million. That would make the tax 66% higher than what it was a year ago when Johnson raised the tax from 9% to 14%. With that increase, the tax yielded $333 million.
Towing fees would also be raised by 66% — from $150 to $250 for vehicles under 8,000 lbs., a category that includes passenger vehicles and SUVs. The towing fee for heavy-duty vehicles would rise from $250 to $350, under the revised fee schedule expected to raise $7 million a year.
The extra revenue generated by the higher towing fees and the cloud computing hike would be used to increase the advanced pension payment above the actuarially required increase, from $117.8 million to $130 million — with a promise to go higher if the cloud tax overperforms, as it has in 2025.
Johnson is also offering to revise his proposed ride-sharing fee to minimize the impact on working people. He originally proposed switching from a flat fee to a percentage, to be applied to a much broader area. But to ease opposition from African American and progressive alderpersons, the map will shrink and the percentage will be abandoned. Instead, Uber and Lyft riders will pay $1.13 per ride.
Nonprofits would be exempt from the proposed boat mooring fee hike that Johnson tried to sell as a “yacht tax.”
The mayor has also offered to reverse a proposed 50% cut to the Chicago Public Library system’s collections budget, and fully fund gender-based violence services that were due to shrink by 43% because of evaporating pandemic relief funds and reduced revenue from a 2% surcharge on home-share rentals.
Even with all of those changes, it’s not clear whether the mayor has lined up the 26 votes he needs to put his budget over the finish line, let alone by next week, as he hopes to do. Asked if Johnson has the votes, Budget Committee Chair Jason Ervin (28th) said, “I don’t think anything is 100% settled at this point. It’s a moving target.”
A handful of African American alderpersons who signed a letter to Johnson declaring their opposition to the head tax could make the difference. They include: Rules Committee Chair Michelle Harris (8th); Police Committee Chair Chris Taliaferro (29th); Black Caucus Chair Stephanie Coleman (16th); Finance Chair Pat Dowell (3rd) and newly appointed Ald. Walter “Red” Burnett (27th).
“The big piece for me is, how do we protect restaurants. I’m trying to figure how we don’t hit them with this head tax,” Burnett said. “I have too many restaurants in my ward for it to be that dramatically impacted. And a lot of them are restaurant groups. They are negatively impacted because they have so many restaurants.”
Ald. Emma Mitts (37th) raised similar concerns about the impact on the restaurant industry, adding, “If they ain’t happy with it, then I ain’t happy with it.”
Top mayoral aides said they explored the possibility of exempting restaurants from the head tax, but concluded that such a carve-out would be illegal.
Ald. Andre Vasquez (40th), co-chair of a 19-member Progressive Caucus that Johnson is counting on to help deliver his budget, is still searching for head tax alternatives.
Vasquez said it might be a better idea to restore the automatic escalator locking in annual property tax increases at the rate of inflation, and perhaps doubling a $9.50-a-month garbage collection fee that has been frozen since its 2015 inception.
“It would be more in line with what other municipalities are doing on the garbage fee for sure. And having the CPI included creates a level of stability so you know what the increase in property taxes will be, rather than people avoiding it for a couple of years — having to make up for it in the third or fourth year,” Vasquez said.
He added, “They’re pushing the corporate head tax as the end-all-be-all, and I don’t know if that’s the right answer or not. … We need revenue, and we’ve got to make sure that we’re not doing things that are disincentivizing hiring, while also making sure we’re not burdening people who are already having a hard time just living day to day.”