Chicago property owners reeling from reassessments will be hit with a double whammy — a $300 million property tax increase — to help Mayor Brandon Johnson balance his $17.3 billion budget for 2025 without layoffs.
Johnson chose the property tax increase he campaigned against — and made it the city’s largest in a decade — instead of asking unionized city employees to give a little by accepting mandatory furlough days or targeted layoffs.
Wednesday afternoon, the mayor's office released estimates of the impact of the tax increase on homeowners. It ranges from $72 a year for a home valued at $100,000 to $481 per year for a home valued at $500,000.
Even after eliminating 743 vacant positions (400 in the Chicago Police Department), the mayor also needed a record tax increment financing surplus of $570 million — $54.1 million more than last year, the previous record. Chicago Public Schools gets $311 million of the TIF surplus. The city gets $132 million.
Johnson told reporters he made the “very difficult decision” to renege on his campaign promise after an “excruciating process.” He had little choice, he said, after “irresponsible administration after administration … kicked the can down the road."
“Now, it’s in front of my door," Johnson said, ignoring the enormous political capital spent by former Mayor Rahm Emanuel to double Chicago's property tax levy to chip away at the city’s pension crisis and identify dedicated funding sources for all four city employee pension funds.
Johnson summarily dismissed the idea of asking his allies in organized labor to swallow a pay cut by taking unpaid furlough days.
“How many furlough days should we ask a police officer to take? Is it one? Is it 10? Same thing with our fire department. They also provide [emergency medical] care,” he said. “The people of Chicago expect us to deliver services every single day, and they’ve come to count on us delivering those services.”
No easy road to Council approval
Instead of demanding shared sacrifice, the mayor is counting on organized labor to help corral the 26 votes he needs to get his budget and property tax increase through a rebellious City Council, where the mayor introduced his proposed budget Wednesday.
It will not be easy. A new poll by a business PAC shows Johnson's approval rating at 14%, with 90% of those surveyed opposing a property tax increase. Already, 14 alderpersons have written a letter to Johnson declaring the increase a "non-starter."
Chicagoland Chamber of Commerce President Jack Lavin and Civic Federation President Joe Ferguson urged an already restive Council to reject that increase and shrink the TIF surplus.
“Maybe it’s time for the City Council to step into the power that they have always had but never exercised before and be a true co-equal branch of government that actually comes forward with alternatives that do involve shared sacrifice,” Ferguson said.
Lavin urged alderpersons to exercise the “fiscal discipline” that Johnson, a former paid organizer for the Chicago Teachers Union, has not.
“We can’t afford to continue to have property taxes skyrocket," Lavin said. "Chicago residents, small businesses that are our job creators — they can’t afford this. We’ve got to look at reforms and cost efficiencies before revenue. That means cutting vacancies across city departments except public safety. That means a real hiring freeze and across-the-board department cuts. It means looking at the [federal pandemic relief] dollars that are still remaining and how they can be spent to address deficits.”
TIF funds, Lavin added, are "where economic development and affordable housing is. That’s the tool we have for growth. We need to be very careful about using TIF surpluses.”
Alderpersons could shoot down or shrink the $300 million property tax increase. The Chicago Board of Education already has raised property taxes by a combined $324 million over two years, the maximum allowed .
Labor concessions needed, some say
If his approach is rejected, the mayor would be forced to return to the bargaining table with organized labor.
“There’s ways to work with the unions to find some givebacks that they’re comfortable with," said Ald. Brian Hopkins (2nd), Johnson’s handpicked chair of the Public Safety Committee. "There’s ways to bring the unions on board with some workforce reductions that don’t necessarily affect members. We still have a lot of vacancies that could potentially be eliminated where you’re not actually touching jobs that are filled."
“ Property values have increased, and that’s being reflected on these reassessment notices," Hopkins added. "People are already primed for a tax rebellion. You’re going to come into that environment with a significant property tax increase proposal? It’s folly."
Workforce Development Committee Chair Mike Rodriguez (22nd) wouldn't comment on the prospect of mandatory furlough days, saying only he's relieved city services will remain untouched.
“None of my constituents is saying, 'I don’t want my trees cut anymore. I don’t want my garbage picked up.’ ... City workers are the backbone of the city’s economy,” Rodriguez said. “I don’t want peoples' jobs [sacrificed]. I don’t want to see any layoffs.”
The “no layoffs” edict was the most important of four demands made by a Progressive Caucus Johnson needs to get his budget over the goal line.
Progressive Caucus Co-Chair Ald. Maria Hadden (49th) also wants Johnson to earmark $5 million for a “Child care for All” pilot program; $40 million for violence prevention programs; and nearly $32 million for a variety of housing and homelessness support programs. None of that is in the proposed budget.
“The no layoffs piece is huge," Hadden said. "If we’ve got people that are unable to care for themselves and their families, then we’re just creating more need in some spaces."
Yet another influential alderperson, who asked to remain anonymous, said Johnson obviously chose the political path of least resistance.
“Their relationships with Council are in the tank. … And they can’t pass anything without labor,” the alderperson said. “They [apparently] feel like furloughs can’t be in the budget in order to get the requisite support.”
In a statement, Roberta Lynch, executive director of AFSCME Council 31, said Johnson "faced extremely difficult choices" and opted for "the best path forward to keep Chicago working for the good of all."
Johnson’s budget pitch: ‘No more disinvestments’
An energized Johnson delivered a nearly hourlong budget address to the Council, interrupted by applause nearly two dozen times.
Waving his arms, raising his voice, the mayor spoke so long and with so much passion, he gestured for water, then sipped repeatedly from the plastic bottles delivered to his side.
Raising property taxes was a “tough decision” he had “grappled with for weeks," he said, but it was “the best option I had.”
“I would certainly much rather tax the rich,” he said, bemoaning his defeated “Bring Chicago Home” referendum, which would have authorized raising the real estate transfer tax on high-end property transactions.
Even in a difficult budget year, however, Johnson said he managed another “down payment” on his promise to invest $1 billion in people and set Chicago “on a path to true equity, promising never to leave behind Black and Brown communities.”
“No longer can Chicago, and no longer will Chicago, be a city where folks cannot afford a home. ... We are going to build and make sure there is affordable housing for every single family who needs it,"Johnson said.
“No more disinvestments. No more selling off our public assets. I am saying no to those bad habits and yes to the future of this city," he said.
The mayor closed his lengthy address with a thank-you to his budget director.
“Annette Guzman is a bad, Black shut-your-mouth,” Johnson said as the Council gave Guzman a prolonged standing ovation. “I’m just talking to my sister. I trust you. I come from a Black woman. I go to bed and wake up to one. And I’m raising one. I’m always gonna bet on a sister.”
Johnson delayed his budget address for several weeks as he raced against a Dec. 31 deadline to erase a $223 million shortfall in this year’s budget and a $982.4 million gap next year.
First liquor tax hike in nearly two decades
The budget also assumes $215.4 million from “improved revenue projections”; $21.4 million in “revenue enhancements,” including the first liquor tax increase in 16 years; changes bringing “uniformity” to a parking tax that now varies between valet services and self-park and weekends and weekday; and a parking ticket amnesty program, though no details have been provided.
Also in the budget: $16.5 million from Bally's temporary casino, up from the $14.4 million expected this year (which was in turn much lower than the original projection of $35 million).
The city would save $150 million by shutting down designated shelters for newly arrived asylum-seekers and operating one 6,800-bed system for everyone experiencing homelessness.
Another $175 million in savings would result from shifting to Chicago Public Schools a pension payment for nonteaching school employees. Before it resigned en masse, the former seven-member Chicago Board of Education approved a $9.9 billion CPS budget that did not include that payment.
Johnson said it will be up to his newly revamped school board to “grapple with” the question of whether the TIF infusion eliminates the need for a high-interest $300 million loan.
“We don’t want cuts to the classroom. Much like we don’t want to have to lay off police officers, firefighters and paramedics, we don’t want to have to lay off teacher assistants or security guards or cafeteria workers,” he said.
Of the $311 million in TIF surplus going to CPS, $11 million is for capital.
The Chicago Police Department budget will increase for the second straight year, to nearly $2.1 billion, largely to accommodate the 5% pay hike Johnson used to extend and sweeten the police contract negotiated by former Mayor Lori Lightfoot.
Johnson’s first budget eliminated 833 sworn police vacancies but increased the police budget to cover the cost of higher pay raises in the new police contract. It promised to create 398 civilian police positions, most of which the city did not get around to filling.
Breaking a promise
The decision to turn first to a property tax increase breaks one of Johnson’s signature campaign promises.
“I’m not gonna raise property taxes. That’s been the lazy form of governance for a very long time in the city of Chicago and, quite frankly, around the country,” mayoral candidate Brandon Johnson told a "CBS Morning Show" interviewer during the campaign.
Earlier this month, Ferguson had outlined a smorgasbord of revenue-raising and cost-cutting options. A property tax increase was “not needed," he argued, and should be only a last resort.
Now that Johnson has ignored that advice, Ferguson fears the consequences.
“The unit of government with the greatest amount of need for property tax for its baseline operating expenses is CPS, and that itself is teetering on a fiscal cliff," he said. "Maybe we are at a tipping point where people say, 'Enough is enough. I can’t bear this burden anymore.'"
If ever there was a “shared sacrifice, distributing the burden moment,” this is it, but that would take political courage Johnson has not demonstrated, afraid to alienate the unions that put him in office, Ferguson said.
“It’s Nixon in China. He actually, because of that background, has the standing to call together his labor brothers and sisters to say, 'I need you to be part of the solution to put us all in a better place going forward,'" Ferguson said.
Even Housing Committee Chair Byron Sigcho-Lopez (25th), a staunch Johnson supporter, said he opposes the property tax increase. Instead, he suggested suspending the supplemental pension payment or cutting the police budget.
How much will new firefighter contract cost?
Chicago firefighters and paramedics have waited more than three years for a new contract. When it’s settled, that will require the city to shell out three years’ worth of retroactive pay raises. That's aside from their demand for 20 more ambulances and paramedics to staff them.
Johnson and his budget team said there's money in the budget for a new firefighter's contract, but they wouldn't say how much.
The Civic Federation’s belt-tightening options had ranged from requiring city employees to take one unpaid day off every two weeks while city executives take a 10% pay cut, to eliminating more than 3,000 “dormant” city vacancies and suspending “non-critical” capital spending.
Another federation recommendation was skipping the supplemental pension payment, a practice started by Lightfoot. Wall Street rating agencies raved, and Johnson continued it in his first budget, setting aside $307 million. This time, he cut that to $272 million.
Even with the tough decisions, Johnson highlighted the “strategic investments” that fulfill his promise to invest in people by increasing support for housing, mental health, violence intervention, broadband access and by providing 2,000 additional jobs for young people.
Johnson: ‘Do I look worried?’
Despite the record TIF surplus, the mayor and his Chief Financial Officer Jill Jaworski stressed that “no project will be delayed or stalled.”
With his public approval rating in the tank, the mayor was asked whether he is concerned about his ability to round up the 26 votes he needs to pass the budget, the record property tax increase, or both.
“Do I look worried?” he asked.
He should be, said Ald. Scott Waguespack (32nd), who served as Lightfoot’s Finance Committee chair before being deposed by Johnson.
“The mayor and the people he’s surrounded himself with don’t know how to manage the city. They made promises that they couldn’t keep. And it’s all pretty glaringly simple that they’re not capable of leading the city in a way that people can trust,” Waguespack said.
“There’s a lot of other options that have to be explored. There needs to be significant cuts in nonessential areas. That’s what we’re going to be looking at during these budget [hearings] and also scaling back a lot of the programs that he’s put out there,” he said.
Johnson acknowledged the uphill battle he faces during an hourlong news conference after the Council meeting.
His proposal marks the “beginning of discussions,” he said, and his door is open for alderpersons to “show up with other ideas” to avoid or reduce the property tax increase — but those ideas “have to make sense."
“It’s one thing to find efficiencies. It’s another to take city services away. That’s what I’m not going to do," Johnson said.
"If people are asking me to lay people off — I’m not doing that. That’s it."
