City Council to reconsider Johnson's $17.3B budget — minus $68.5M property tax hike

After weeks of political acrimony, the City Council on Monday could be poised to approve Mayor Brandon Johnson’s revised $17.3 billion budget — minus a $68.5 million property tax increase — averting what would have been the first budget shutdown in the city's history.

Getting to the vote, should it happen, has not been easy.

If Johnson manages to deliver his budget and the $165.5 million tax package to support it, he will have secured victory on the most important Council vote of the year — but only after making several rounds of changes and calling off a vote last Friday he was destined to lose.

Monday's meeting got off to a rocky start after raucous protests — described by Ald. Ray Lopez (15th) as “anti-Trump and anti-facist” — continued in the public gallery — even after Johnson pleaded for calm. The mayor then asked the sereant-at-arms to clear the chamber, prompting a recess.

Although Chicago property owners bracing for reassessments have been spared a double-whammy, the Chicago Board of Education will once again hit them with a property tax increase that amounts to the maximum allowed by state law.

The mayor’s revised budget also would hit Chicagoans in the wallet in a host of other ways, such as adding an amusement tax on streaming services; higher taxes on cloud computing, business software and equipment leases; and higher taxes on parking and downtown congestion.

The city also hopes to generate $11.4 million in more revenue from “automated speed limit enforcement,” presumably by adding more speed cameras in wards where alderpersons allow it, and $4.6 million by raising an array of license fees, transfer fees and fines, as well as the cost of residential parking permits.

Backing off a property tax hike

The mayor originally proposed a $300 million property tax increase that broke his campaign promise to hold the line on property taxes, then he agreed to cut the increase in half after the Council took the extraordinary step of rejecting it by a unanimous vote. He then tried for a $68.5 million property tax hike, to no avail.

Johnson also proposed a 34% increase in the liquor tax, then agreed to scrap it altogether after an outcry from the hospitality industry and alderpersons whose bars, restaurants and liquor stores could lose business to surrounding suburbs.

The mayor agreed to restore 162 Chicago police jobs tied to implementing a consent decree outlining the terms of federal court oversight of the Chicago Police Department after Illinois Attorney General Kwame Raoul threatened to ask a judge to hold the city in contempt.

And he cut $90 million worth of spending from federal pandemic relief funds, in part, by scrapping a second round of guaranteed basic income and a small-business assistance program.

With all of those changes, he was still seven votes short of the 26 needed for passage. Friday’s delay forced the mayor back to the drawing board to hunt for more votes over the weekend.

To get those votes, he scrapped the $68.5 million property tax increase and proposed saving $40 million restructuring the debt owed on the now-demolished Michael Reese Hospital. The city bought that site, planning to put an Olympic Village for the 2016 Games, but they went to Rio de Janeiro.

It’s not the first time that the city has refinanced the Reese debt.

When he was mayor, Rahm Emanuel lightened the load of the financial albatross — twice.

The city saved $14.5 million with a refinancing that reduced a fixed interest rate of 7.5% to 5.95%.

Then, six years later, Emanuel reduced the burden again by paying off the outstanding promissory note with MRL Financing and refinancing the debt with PNC Bank at a fixed interest rate of 3.55%.

That saved taxpayers $4.25 million, reducing the principal and interest still owed from $120.7 million to $116.5 million.

The latest changes to the 2025 budget also include $10 million in “cost recovery” by charging organizers of ticketed events for police and traffic services and by better scheduling those events to reduce overtime costs.

The final budget also assumes other savings: $1 million by cutting 10 jobs in the mayor’s office; $2.8 million by eliminating middle-management jobs of deputy commissioners and their assistants; and $5 million through unspecified “energy and facilities management efficiencies.”

In all, 26 middle-management jobs were targeted, half of them in the Chicago Police Department, including 10 assistant program directors and three projects administrators.

Still not good enough, says Council’s ‘Common Sense Caucus’

For 15 members of the so-called “Common Sense Caucus,” the mayor’s final offer barely scratched the surface.

They demanded $823.7 million in cuts that include eliminating the $61.3 million-a-year Office of Public Safety Administration and scrapping Johnson’s $50 million plan to create 2,000 more summers jobs and increase spending to combat homelessness. They also wanted to cut the $435,000-a-year budget for the office of the vice mayor, a post held by 27th Ward Ald. Walter Burnett.

For all the concessions Johnson was forced to make, Civic Federation President Joe Ferguson was not impressed.

The budget version up for a vote on Monday reflected an effort to “avoid actually doing anything other than get to 26 votes," he said.

"We are at the end of the runway, and the city has to get busy about its structural problems,” Ferguson added.

“The measures taken here … do not put us in any better situation for 2026, where the challenge will be even greater. That is what the rating agencies want to see. They’re not looking at whether or not we have a budget by Dec. 31,” Feguson said of the all-important bond rating that determines city borrowing costs.

“They’re looking at whether or not that budget goes in reverse with regard to bad practices … and manifests an intention through substantive measures to begin to address the true structural challenges the city has. This doesn’t do it. … This is largely a revenue and one-time solutions budget. There is no leaning into the expenditure side. No leaning into the revenue side.”

Some ‘mistakes,’ aide says, but a ‘good process’ in the end

Senior mayoral adviser Jason Lee said "there are always mistakes," and the Johnson administration made a few that may have contributed to contentious negotiations and distrust with a Council emboldened by the mayor's anemic public approval ratings.

But the sometimes messy process was no different than what goes on all of the time in "every other body of government," Lee said.

And he denied Johnson will pay a political price for his stumbles.

"We're paid to do a job. It can be difficult. It can be easy. Whatever. If I'm the public, the only thing I want to know is ... what was the outcome? What did we achieve? What does that mean for me as a resident of the city of Chicago," Lee said.

"This was a negotiation. And the outcome is not bad at all given the realities that we face. There are major efficiencies in this budget. There's investments in this budget. There's some new revenue in this budget. Fiscal obligations are met in this budget. What is the outcome that people should be upset with?" he asked.

Lee denied it was a mistake for the mayor to introduce a budget that included a $300 million property tax increase at a time when property owners have or will be hit by reassessment increases.

Property taxes are “the most widely known predictable revenue currently available to municipal governments in the state of Illinois,” and therefore, it made sense to propose it to chip away at the city’s structural deficit, Lee said.

“What we said from day 1 is, we can work with the Council on finding other forms of revenue to help us meet our obligations, fund our government, make some investments and not have to cut services. … That was achieved in this budget,” he said. “By having a structural placeholder like property taxes, that created the space for a conversation on revenue that was available to us. Ultimately, that was a good process.”