Politics
Mayor Brandon Johnson Drops Plan for $68.5M Property Tax Hike in Latest Budget Proposal
City Hall is pictured in a file photo. (Michael Izquierdo / WTTW News)
Mayor Brandon Johnson told members of the Chicago City Council on Sunday that a combination of spending cuts and newly discovered “operational efficiencies” mean a $68.5 million property tax hike is no longer needed to balance the city’s 2025 budget, sources familiar with the proposal told WTTW News.
Johnson’s decision to drop his plan to hike property taxes came approximately 24 hours before the City Council is set to gather again at City Hall to consider approving a spending plan for 2025, just 16 days before the deadline to avoid an unprecedented shutdown of Chicago government.
The spending plan still calls for a host of other taxes and fees to rise by an additional $165.5 million, including a 2% increase in the tax levied on software licenses, cloud services and other digital goods as well as a 1.25% increase on subscriptions to streaming and cable television services.
But the last slice of the original $982.4 million budget gap officials have struggled to bridge since August will be closed with $45 million in “operational efficiencies” across the city’s departments and $23.6 million in cuts that will not require employees to be laid off or services to be cut, sources told WTTW News.
Ten positions will be cut from the mayor’s office, including potentially some deputy mayors, to save $1 million, and signal “shared sacrifice,” sources said. Johnson has appointed nine deputy mayors, more than any of his predecessors. Another $2.8 million will be saved by cutting “middle management,” according to a document obtained by WTTW News.
Officials will also step up efforts to get organizers of special events, like parades and festivals, that rely on the Chicago Police Department to reimburse the city for the cost of requiring officers to work overtime, sources said. That could mean an additional $10 million for the city, according to estimates provided to WTTW News. Another $8.6 million will be saved by reducing spending on city contracts, sources said.
In addition, city officials plan to save $40 million by spreading out payments on the debt incurred by former Mayor Richard M. Daley when he bought the 48-acre former Michael Reese hospital just south of McCormick Place for $91 million in 2009 as part of his plan to win the 2016 Olympic games for Chicago. The games went to Rio instead.
Although the City Council approved a $4 billion redevelopment that included 4,800 new homes, offices, research facilities and stores for the former Michael Reese site in 2021, the land remains vacant. More recently, the Chicago Bears have considered building a new stadium on the site.
That proposal will not add to the city’s already high debt burden, sources said.
None of the more than 1,000 vacant positions in the Chicago Police Department, which accounts for nearly 46% of Chicago’s discretionary spending, will be cut, despite several alderpeople saying Friday they were open to cuts that could save approximately $170 million.
Not only would those cuts have drawn the ire of the politically powerful Fraternal Order of Police, Lodge 7, it would have made it impossible for CPD to cover its massive overtime bill, sources told WTTW News. During the first six months of 2024, CPD spent $130 million on overtime, even though its entire annual budget for overtime is $100 million.
A month and a half ago, Johnson told Chicagoans he had no choice but to propose a $300 million property tax hike to avoid what he called draconian cuts to city services and thousands of layoffs while staunching the flow of red ink threatening to consume Chicago’s finances.
That proposal ran into a buzz saw of opposition from Johnson’s progressive allies who feared a property tax hike would push longtime residents struggling amid a wave of gentrification out of their homes. For more conservative alderpeople, the lack of any significant cuts in the budget plan made it impossible for them to reassure residents the city was hiking taxes as a last resort.
After the City Council unanimously rejected the mayor’s $300 million property tax hike, he proposed lowering the increase to $150 million. The City Council quietly rejected that plan as well.
Johnson’s third budget proposal, which relied on a $68.5 million property tax hike, won the narrow endorsement of two City Council committees, setting up what the mayor had hoped would be a final vote on the overdue spending plan on Friday.
But the mayor was forced to cancel that vote when it was clear that he did not have enough votes to pass the plan because it relied on a property tax hike. That triggered a weekend of frantic negotiations that resulted in the mayor’s fourth budget proposal.
The City Council is set to meet at 1 p.m. Monday to consider it, but its passage is far from certain.
The mayor’s latest plan vindicates the criticism he has faced from elected officials across the political spectrum and makes it clear that raising property taxes was not the only way to avoid layoffs and service cuts.
It also means that Johnson broke one of his central campaign promises – not to raise property taxes – when there were other options available to his administration that he failed to propose before becoming the face of the second largest proposed property tax hike in Chicago history and the largest since 2016.
Johnson again defended his handling of the negotiations over the city’s 2025 spending plan on Friday, referring to himself as the “collaborator in chief” and disputing suggestions that City Hall has been engulfed in chaos. The mayor also declined to identify something he regrets doing as part of the budget negotiations.
Instead, Johnson has said alderpeople were struggling to adapt to his more democratic approach after decades of mayors who refused to tolerate any opposition to their spending plans.
Wall Street ratings agencies could react to the budget-related turmoil in Chicago by lowering the city’s credit rating, making it more expensive for the city to borrow money, making Chicago’s financial hole deeper.
S&P Global Ratings put the city on a negative credit watch before Thanksgiving, finding there is at least a one-in-two chance of a downgrade in the next 90 days.
Contact Heather Cherone: @HeatherCherone | (773) 569-1863 | [email protected]
