If the Illinois General Assembly refuses to support progressive revenue sources needed to help dig Chicago out of its massive budget hole, Mayor Brandon Johnson may seek a dramatic expansion of the city’s home rule authority to allow the city to help itself, a top mayoral aide said Thursday.
“If there’s no viable option, but there is momentum on giving Chicago more home rule authority, sure, we would be willing to take that on and do what’s necessary for the people of Chicago,” senior mayoral adviser Jason Lee told the Sun-Times.
“If for whatever reason they say, ‘Look, as much as we believe these are good ideas, we just can’t execute them,’ then we can say, ‘All right, well, will you let us do it?'”
The home rule authority that gives Chicago broad power to govern itself dates back to 1970 when Illinois adopted a state constitution.
It designated Illinois cities with more than 25,000 residents as home rule units and gave those cities broad powers to incur debt and to tax, regulate and license themselves without state approval.
But there are limits to that authority. Chicago can levy certain local taxes without state legislation or voter approval, but not others.
A classic example was Johnson’s signature “Bring Chicago Home” proposal to raise the tax on high-end real estate transactions to generate $100 million a year to combat homelessness.
The mayor’s preferred option was to convince state lawmakers to raise the real estate transfer tax. When lawmakers refused and Gov. JB Pritzker gave the proposal the cold shoulder, Johnson had to seek approval from Chicago voters. The referendum failed after a big bucks campaign by real estate and business interests.
The limits to Chicago’s home rule powers also explain why the perennial idea of extending the state sales tax to professional services — with a potential annual yield of $305 million for Chicago — has gone nowhere for decades. It needs legislative approval and, so far, hasn’t gotten it.
Legislative approval would also likely be needed to impose the corporate payroll tax championed by the so-called “Institute for the Public Good,” a group of mayoral allies behind the failed “Bring Chicago Home” referendum.
The group has claimed that asking corporations with “more than $8 million” in annual payroll to pay 5% of salaries paid to employees earning more than $200,000 a year could generate a $1.5 billion annual windfall for the city.
Lee acknowledged the obvious. The mayor would rather have state lawmakers walk the tax plank with him at a time when Chicago has reached the “point of no return” with “systems that people rely on — education, health care, housing, our transportation — they are woefully underfunded.”
“Springfield has the option of giving us more home rule authority … or Springfield has the option of taking up some of these measures on its own and not just benefiting Chicago, but benefiting the whole state,” Lee said.
“Just because you haven’t done it doesn’t mean you can’t do it or won’t do it. … For decades, we didn’t have authorization for a casino in the city of Chicago until it was done. … We didn’t have an evidence-based funding formula [for school funding] for decades until it got done. … That doesn’t mean because it hasn’t been done that they can’t do it.”
The request for more local authority could extend to the Chicago Board of Education, which has less than two weeks to approve a budget that erases a $734 million shortfall.
Lee argued that Chicago’s soon-to-be-fully-elected school board should be granted the same authority as all school boards across the state — the power to seek voter approval for property tax increases that exceed the tax cap and amend its budget with a simple majority.
With no legislative solution on the immediate horizon, Lee said short-term borrowing may be the only way to avoid classroom cuts.
“It’s easy to see what’s necessary in a moment where you’re $1.6 billion in arrears from the state based on their own formula,” he said.
Pointing to the sentiment expressed during community meetings on the school budget, Lee said, “When the parents had to choose between the bond rating and their children, they chose their children. Those are the stakeholders that we have to be accountable to.”
In a few weeks, a working group of business and labor leaders appointed by the mayor will unveil its preliminary list of revenue-raising and cost-cutting ideas to help erase the city’s $1.12 billion shortfall and shape Johnson’s 2026 budget.
That will set the stage for what is almost certain to be one of the most contentious budget battles in Chicago history.
Last year, Johnson broke his promise to hold the line on property taxes only to have an emboldened City Council unanimously reject the mayor’s proposed $300 million property tax increase and refuse to raise property taxes by any amount.
Lee said this year’s debate will begin with an executive budget that “upholds the mayor’s values” to neither raise property taxes nor entertain layoffs and furlough days. But it may not end that way.
Johnson’s two most powerful City Council allies — Finance Chair Pat Dowell (3rd) and Budget Chair Jason Ervin (28th) — favor reinstating the automatic escalator imposed by former Mayor Lori Lightfoot locking in annual property tax increases at the rate of inflation.
“We have to recalibrate our thinking on how budgets in Chicago work. This is not the mayor by fiat. This is a legislative process,” Lee said.