Politics

City Council Votes 30-18 to Approve Final Part of 2026 Budget. Will Mayor Veto It?

The Chicago City Council voted 30-18 Saturday to approve the final portion of a nearly $16.6 billion budget for 2026 without hiking a per-employee tax on large firms, despite fierce opposition from Mayor Brandon Johnson.

Johnson now faces what could be the biggest decision of what he hopes will be his first term in office: whether to veto the spending plan approved by the City Council over his objections and plunge the city into the most severe fiscal crisis in more than 40 years.

Johnson was not scheduled to make that announcement until next week.

Johnson and the city’s top financial officials contend the plan now awaiting his signature —or his veto — would leave the city with a deficit of more than $163 million. It is the first budget in Chicago history to be passed after being crafted by members of the City Council without the help of the city’s finance team or the support of the mayor.

The vote followed an impassioned debate, with members of the Progressive Caucus and allies of the mayor decrying the spending plan crafted by their colleagues.

Johnson faces political peril no matter what he decides to do. If the mayor vetoes the budget, the city will move to the edge of a shut down for the first time in 40 years.

The vote on the 2025 Chicago Budget. (City of Chicago)

Even though Ald. Jeanette Taylor (20th Ward) voted against several of the ordinances that make up the budget, technical difficulties prevented her from casting a vote against the crucial ordinance, making the official vote 30-18.

With a veto, Johnson would gamble that he can convince at least five members of the City Council to support his plan to impose a head tax on the city’s largest corporations and avert fiscal disaster.

But if he does not, Johnson will allow a budget he has called immoral to become law and see his last, best chance to levy hundreds of millions in new taxes on the wealthiest Chicagoans to fund new investments designed to boost working class Chicagoans, particularly on the West and South sides.

Johnson, and all 50 members of the City Council, are set to face Chicago voters in February 2027.

Before the vote, Johnson touted what the spending plan approved by the City Council has in common with the budget he proposed, and boasted of beating back efforts to cut 5,000 jobs from the city’s summer youth program and hike the garbage tax.

“We may not have the majority of the City Council but we do have the people,” Johnson said just before the vote.

The last time the Chicago City Council attempted to override a mayoral veto of a budget was in 1984, in the midst of what has become known as Council Wars, when a block of White alderpeople — led by now-convicted former Alds. Ed Burke (14th Ward) and Ed Vrdolyak (10th Ward) — thwarted initiatives from former Mayor Harold Washington, the city’s first Black mayor, at every turn.

“We have the new Vrdolyaks trying to come back,” Ald. Byron Sigcho Lopez (25th Ward) said.

That prompted a retort from Ald. Andre Vasquez (40th Ward). Both Vasquez and Sigcho Lopez and members of the Progressive Caucus.

“This ain’t the Vrdolyak crew,” said Vasquez, even as he said he would vote against the budget. “You’re not Harold Washington.”

Debate Over Debt Collection 

The newly approved budget calls for more than $473 million in new taxes and relies on $35 million in revenue from advertising on city light poles and in other public spaces to close a $1.19 budget gap.

The plan also calls for the city to collect an additional $89 million from Chicagoans who owe the city ambulance payments, utility bills and red-light camera tickets by selling that debt to a private company.

Calling that plan “morally bankrupt,” Johnson said those firms would target the poorest residents, including Black and Brown residents, and was unlikely to materialize.

Johnson said just before the vote he continues to have “serious concerns” about that proposal, which he called “ill conceived” and said he was loathe to take responsibility for such a plan, which he said could lead to significant cuts to city services.

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, officials said.

Ald. Monique Scott (24th Ward) said it was hypocritical for the mayor to slam the rival budget plan when his budget also calls for the city to step up debt collection. However, that plan would not allow the city to authorize private firms to attempt to collect that debt.

“Don’t use my people for political theater,” Scott said.

Ald. Maria Hadden (49th Ward) said she was disappointed that a majority of the City Council did not trust the city’s finance team, which ensnarled negotiations over the spending plan.

“We are better than this,” Hadden said, adding that she was “horrified” by how members of the City Council treated each other during the budget negotiations, which began in earnest in mid-October.

Ald. Lamont Robinson (4th Ward) told his colleagues they owed an apology to Budget Director Annette Guzman and Chief Financial Officer Jill Jaworski.

“They have been treated like trash,” Robinson said.

The spending plan counts on $176.6 million in revenue that was not included in the mayor’s plan. But those changes will actually result in an $8.3 million loss to the city, officials said.

Ald. Jim Gardiner (45th Ward) blamed the city’s financial crisis on the arrival of more than 51,000 people, many fleeing violence and economic collapse in Venezuela, in Chicago, most on buses paid for by Texas Gov. Greg Abbott, a Republican, between 2022 and 2024.

Gardiner said Johnson had helped those primarily Latino residents at the expense of Black Chicagoans.

That prompted pointed criticism from several of his colleagues, including Robinson, who told Gardiner, a White man who represents a ward where a majority of residents are White, to not speak about what the Black community needs.

Chicago taxpayers spent a total of $268 million, with an additional $370.5 million coming from state and federal grants, to care for the migrants between August 2022 and December 2024.

Chicago’s finances have long been out of whack, pinched by soaring pension costs, spiraling personnel costs and a massive amount of debt. Officials are staring into a financial abyss after hitting the so-called “fiscal cliff,” with Chicago’s federal COVID-19 relief funds exhausted and tax revenues lagging after a period of high inflation.

The City Council voted 29-19 on Friday to raise the necessary revenue for the city’s 2026 spending plan. The measures approved Saturday would allow the city to spend those funds.

The measure approved Saturday removed a proposal from Johnson that would have required the Chicago Police Department publicly request more funds from the City Council if it exhausts its $200 million budget for overtime.

Through the end of November, CPD has spent $251 million on overtime, despite the fact that its budget was $100 million, according to records published by the inspector general.

Opponents of the mayor would need to find three additional votes to override a mayoral veto.

There are just 10 days left before the deadline to avoid an unprecedented shutdown of city government. 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.

Johnson has vowed to prevent a shutdown, which could prompt Wall Street ratings agencies to downgrade the city’s credit rating, making it more expensive for the city to borrow the funds it needs to keep the city running.

S&P, one of a handful of major ratings agencies, downgraded Chicago’s credit one notch after the City Council approved last year’s budget, saying it left intact “a sizable structural budgetary imbalance” that will only worsen the city’s financial condition.

The real threat to the city’s credit rating is the unwillingness of members of the City Council to make hard decisions, Ald. Jason Ervin (28th Ward) said.

Ervin, the chair of the Budget Committee, said he and his colleagues would have to come back after the start of the new year and fix the city’s finances, perhaps indicating that Johnson does not plan to veto the budget.

“We all must come back together to fix this because the price of not doing it only continues to go up,” Ervin said.

The City Council voted 39-11 Friday to approve a plan backed by Johnson to borrow $1.8 billion.

That includes $166 million to cover the cost of raises for firefighters who worked without a contract for four years, $283 million to cover the escalating cost of police misconduct settlements and fund the city’s infrastructure program for 2026 and 2027, which includes $144.6 million to repair bridges and viaducts, $174 million for street resurfacing and $173 million to replace lead service lines.

Chicago had $10.6 billion in outstanding debt backed by the city’s property tax and sales tax receipts at the end of 2024, according to the city’s 2024 Annual Comprehensive Financial Report.

In addition, the City Council approved a measure that would allow city officials to refinance $1 billion of the city’s debt during 2026.

New Revenue

The budget also hikes Chicagoans’ property taxes by $9.1 million to boost the budget for the Chicago Public Library, which had been set to see 69 vacant positions eliminated in next year’s budget.

Johnson had vowed to veto any budget that raises property taxes.

The budget approved Saturday 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 along with $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.

The city can only count on $4.6 million of that revenue, Guzman and Jaworski told the City Council.

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 spending 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.

Both the spending plan approved by the City Council and Johnson’s newest proposal would also pay an additional $139.9 million into the city’s woefully underfunded pension funds.

Johnson had initially proposed paying just $120.8 million more to the city’s four pension funds, and was under increasing pressure from some of his own allies to increase that amount.

The largest tax hike included in both proposals would boost the tax levied on software licenses, cloud services and other digital goods from 11% to 15% to generate $415.2 million. The mayor has touted that as a tax hike on “big tech.”

In addition, both budget plans declare $1 billion in property taxes earmarked to fight blight to be “surplus,” sending more than $550 million to Chicago Public Schools.

The CPS budget approved by the Chicago Board of Education for the 2025-26 academic year counted on getting $379 million in TIF funds in order to close a $734 million budget gap.

That means the surplus declared by the mayor will give CPS an additional $173 million, enough to cover the $175 million payment that Johnson has asked the school district to make into the pension fund controlled by the city that pays for the retirement of some of their employees.

The budget also includes a plan to generate $31 million by taxing social media companies with a tax of 50 cents per month for every active user after the first 100,000 users, under the city’s amusement tax authority, officials said.

That money would be used to fund the city’s public mental health clinics and crisis response program, according to Johnson’s proposed budget.

Several alderpeople said they were skeptical that the first-of-its-kind tax, assessed under the city’s amusement tax authority, would withstand a legal challenge, but Guzman said the lawyers for the city were confident it would be upheld.

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Contact Heather Cherone: @HeatherCherone | (773) 569-1863 | [email protected]