Business
Push to Find New Sources of Revenue Set to Seize Chicago City Hall Spotlight
(Michael Izquierdo / WTTW News)
For decades, Chicago’s finances have been out of whack.
Pinched by soaring pension costs and a massive amount of debt, mayor after mayor after mayor vowed to bring the city’s expenses in line with its revenues — without significantly raising taxes on the city’s residents. That approach yielded only limited success.
Unlike his predecessors, Mayor Brandon Johnson was elected on a campaign platform that vowed to levy $800 million in new taxes on the wealthiest Chicagoans to fund new investments designed to boost working class Chicagoans, particularly on the West and South sides.
As the mayor ramps up work on his second budget proposal, a newly formed Chicago City Council subcommittee is set to meet at noon Wednesday to start examining the dozens of proposals to increase the amount of money officials have on hand to spend starting in 2025.
That effort will be led by rookie Ald. William Hall, elected alongside Johnson to represent the 6th Ward, which includes parts of Auburn Gresham, Chatham and Englewood.
Hall said his goal is to inspire Chicagoans to participate in the effort to find new sources of revenue for the city by first better understanding how city services are funded.
“Our goal is to teach and share and be transparent,” Hall told WTTW News.
Part of that effort included sending an online survey to all 50 alderpeople asking them to weigh in on more than a dozen proposed ways to hike taxes and fees.
No votes are scheduled Wednesday, but decisions will start to be made in the “very, very near future,” Hall said.
“Chicagoans want to see taxes that are fair, taxes that are reasonable,” Hall said.
Johnson has yet to fulfill his promises to increase the amount of money flowing into the city’s coffers and use that new revenue to invest in Chicagoans “without breaking the backs of working people with fines, fees and property taxes,” as he vowed in his inaugural address.
That push suffered a significant setback when Chicago voters rejected the proposal known as Bring Chicago Home, which would have given the Chicago City Council the power to hike the Real Estate Transfer Tax on property sales over $1 million to help fund efforts to fight homelessness.
During the campaign, Johnson vowed to impose a $4 per employee tax on large companies, which could raise approximately $25 million annually.
That head tax was eliminated in 2011 by former Mayor Rahm Emanuel, who said lifting it helped spur millions of dollars of economic activity in the city and prompted dozens of companies to relocate to Chicago.
Efforts to reimpose that tax have long been opposed by pro-business members of the City Council, who condemn it as a job killer.
Other proposals alderpeople were asked to weigh in on included “Sales Tax on Services; Property Tax (CPI Increase); Monthly/Wireless Plan Tax; Increase in LGDF Share; Head Tax; Alcohol Tax; Checking Bag Tax; Video Gaming Tax; Grocery Tax; City Sticker Increase; Congestion Tax; Income Tax Surcharge; Package Tax; Vacant Lot Tax; Ticket Reseller Amusement Tax; Enterprise Zones,” according to the survey.
Not on that list was a proposal included as part of Johnson’s platform that sought to add a $1 or $2 tax to each securities trading contract. That would require a change in state law, and Gov. J.B. Pritzker has made it clear that is a nonstarter.
Hall said everyone agrees that city officials must find new ways to cover Chicago’s costs — or cut services, a deeply unpopular option that would strike at the heart of Johnson’s progressive agenda, which envisions a much more activist and robust city government.
That, of course, takes money that the city does not have.
Although it was listed as an option on the survey sent to alderpeople, Johnson campaigned on a promise not to raise Chicagoans’ property taxes, the city’s largest source of revenue and the most effective way for city officials to raise revenue and ensure expenses do not outstrip costs.
Johnson reversed former Mayor Lori Lightfoot’s deeply unpopular plan to automatically hike property taxes to keep pace with inflation.
The city faces a $2.74 billion pension bill in 2025, according to city records, in order to comply with a state law that requires two of Chicago’s funds be funded at a 90% level by 2055 and the other two by 2058, ensuring they can pay benefits to employees as they retire.
Chicago’s four pension funds, which face a massive structural shortfall, are less than 24% funded, combined, complicating Johnson’s efforts to fulfill his campaign promises to invest in Chicago and its people.
In all, Chicago owes $35.4 billion to its four employee pension funds representing police officers, firefighters, municipal employees and laborers, according to the city’s 2022 Annual Comprehensive Financial Report, the most recent available.
It is unclear whether the city’s first casino will generate enough revenue to serve as a long-term solution to its pension woes, according to the group’s report.
A temporary casino opened in September in the Medinah Temple, with the casino and resort planned for the current River West home of the Chicago Tribune set to open in 2026.
Officials had counted on the casino to generate as much as $200 million annually, which state law earmarks for police and fire pensions, but it is unclear whether that will come to fruition.
That’s why Hall said he is committed to finding ways to increase the amount of money officials have on hand to spend without increasing taxes, like allowing digital billboards along the Riverwalk, in empty storefronts downtown and in city parks and allowing video gambling, as first reported by Crain’s Chicago Business.
“Let’s grow money before we take money,” Hall said.
The Johnson administration will hold four forums to gather feedback as they craft the city’s 2025 budget.
They will take place:
- 6 to 8:30 p.m. July 22 at Malcolm X College, 1900 W. Jackson Blvd.
- 6 to 8:30 p.m. July 25 at Kennedy King College, 6301 S. Halsted St.
- 10 a.m. to 12:30 p.m. July 27 at Truman College, 1145 W. Wilson Ave.
- 10 a.m. to 12:30 p.m. July 27 at Harold Washington Library, 400 S. State St., open only to teens and young adults age 13 to 24.
More information about the forums is available online.
Contact Heather Cherone: @HeatherCherone | (773) 569-1863 | [email protected]
