Politics
Key City Panel Advances Budget Plan That Mayor Says Would Leave Chicago With $163M Deficit
A plan to bridge Chicago’s $1.2 billion budget gap without hiking taxes on large firms — now headed to a final vote of the City Council with the endorsement of two key city panels — would leave the city with a deficit of more than $163 million, according to Mayor Brandon Johnson.
Johnson called the plan speculative, infeasible and immoral, but has yet to announce whether he would veto the plan. It would take 34 votes to override that rejection.
Despite the mayor’s opposition and dire warnings from the city’s top financial officials, the City Council’s Budget Committee voted 21-13 late Wednesday to send the plan to the full City Council for a final vote, which could take place as soon as Friday. The two votes amount to a stunning rebuke of Johnson, his administration and his vision for the city.
City officials have just 13 days to avoid an unprecedented shutdown of city government.
The rival budget proposal, which cleared the Finance Committee on Tuesday on a 22-13 vote, would impose $473 million in new taxes and fees while relying on $35 million in revenue from advertising on city light poles, vehicles and in other public spaces.
Budget Director Annette Guzman, Chief Financial Officer Jill Jaworski and Comptroller Michael Belsky told the City Council’s Budget Committee on Wednesday that only a fraction of those proposals were realistic, legal or even possible.
Jaworski said Chicago was certain to see its credit rating downgraded if the City Council passes an unbalanced budget, making it much more expensive for the city to borrow money.
Supporters of the rival budget plan repeatedly insisted that it is balanced.
The rival budget plan also calls for the city to collect an additional $89 million from Chicagoans who owe to the city ambulance payments, utility bills, red-light camera tickets and other debt while eliminating Johnson’s proposal to levy a $33 per month per employee tax on companies with 500 or more employees in order to generate $82 million to fund violence prevention and youth employment programs.
The budget would allow the city to sell the debt to a private company, and Johnson has said those firms would target the poorest residents, including Black and Brown residents.
While Johnson and his allies have defended the so-called head tax as the best way to continue funding the programs they credit with reducing Chicago’s homicide rate by approximately 29% and the city’s overall violent crime rate by more than 22%, opponents contend the tax will kill jobs and stifle economic growth.
The mayor’s proposed spending plan already calls for the city to collect $113 million more in city debt, and there is a detailed plan to ensure that new revenue materializes, Guzman said.
But few members of the City Council’s Budget Committee appeared to take Guzman at her word, a recurring problem that has helped ensnarl negotiations over the spending plan.
Ald. Brendan Reilly (42nd Ward), who is running for Cook County Board president, openly scoffed at their analysis.
“Who is checking the math from the budget office?” Reilly said. “The budget office’s credibility has fallen off a cliff.”
The rival budget plan also relies on an additional $29.3 million that would come from new advertising on 3,000 city light poles, city vehicles and iconic bridge houses, according to the proposal.
The proposal also relies on $6 million from an “augmented reality” advertising licensing program that would allow companies to impose videos and other content on city properties like Millennium Park or the Riverwalk that can be seen through a smartphone, virtual reality glasses or tablet, according to the proposal.
The city can only count on $4.6 million of that revenue, Guzman and Jaworski explained, citing both the need to craft new rules and past efforts to expand advertising on city property that failed.
That angered Ald. Nicole Lee (11th Ward), who helped craft the rival budget plan.
“Your job was to tear our numbers apart,” Lee said.
Dowell said it was clear Guzman and Jaworski had been “extra critical” of the rival budget proposal, adding that she was angry that many of the mayor’s office estimates would generate $0.
“Zero dollars, that’s like nothing,” Dowell said.
The alternative plan also makes $46.6 million in cuts identified by consulting firm Ernst & Young in a report designed to help Chicago officials root out inefficiencies. That calls for vacant positions to be eliminated and for “service optimization” by charging more for things like false burglar alarms and ambulance rides, according to the proposal.
But the city can only count on $6 million from those changes, in part because Chicago does not have a system that would allow the city to send a bill to property owners for false alarms, Guzman said.
The rival budget plan also relies on $8.7 million generated by charging shoppers 15 cents for each single-use paper and plastic bag at stores and allowing retailers to keep 1 cent to cover costs. The current tax is 10 cents, with store owners keeping 1 cent. That fee was also hiked by 3 cents in last year’s budget.
But that hike would actually only bring in $5.2 million, because more people would bring their own reusable bags on their shopping trips, Guzman said.
In addition, a plan to legalize video poker and slot machines in every Chicago bar or restaurant with a liquor license would not ring up $6.8 million in revenue, as the rival budget plan projects, but instead cost the city $3 million, based on a study from a city consultant, Jaworski said.
The rival budget proposal also relies on $6 million from a 1.5% increase in the taxes on beer, wine and liquor sold at stores for consumption elsewhere.
But that change would actually cost the city $4 million and be nearly impossible to implement by Jan. 1, Guzman said.
City officials have warned that hike would likely be struck down by the courts, because it makes alcohol consumed on site less expensive than booze consumed elsewhere, and it is opposed by the politically powerful hospitality and restaurant industry.
The rival budget plan would also pay an additional $139.9 million into the city’s woefully underfunded pension funds. Johnson had proposed paying just $120.8 million more to the city’s four pension funds.
But because the city has dedicated funds that must pay into specific plans, it would take just an additional $117.8 million to boost the additional payment to the original amount, Guzman said.
The city faces a nearly $2.85 billion pension bill in 2026 in order to comply with a state law that requires two of Chicago’s pension 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.
The rival budget plan would also set aside an additional $10 million for programs designed to reduce gender-based violence, $5 million to the Chicago Public Library’s budget to purchase new materials and $3.5 million for two violence-interruption programs, Becoming a Man and Working on Womanhood.
One of the last changes made to the spending plan by the Budget Committee removed a requirement that CPD request more funds from the City Council if it exhausts its budget for overtime, as it did this year by June, officials said.
Officials cannot pass a short-term ordinance to keep City Hall functioning while negotiations continue, officials said. That means without a budget agreement, more than 30,000 workers will not be paid and city services will stop.
Contact Heather Cherone: @HeatherCherone | (773) 569-1863 | [email protected]
