Mayor Brandon Johnson's proposed $17.3 billion city budget for 2025 includes $300 million property tax hike

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 2025 budget 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.

Even after eliminating 743 vacant positions, 400 of them in the Chicago Police Department, the mayor also needed a record tax increment financing surplus of $570 million. That’s $54.1 million more than the previous record, which was just last year. Chicago Public Schools gets $311 million of this year's TIF surplus.

Johnson said he made the “very difficult decision” to renege on his signature campaign promise after an “excruciating process.” He claims he had little choice 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 him corral the 26 votes he needs to get a politically unpopular and, some say, unnecessary property tax increase through a rebellious City Council.

It will not be easy. A new poll conducted by a business PAC shows Johnson's approval rating at 14% with 90% of those surveyed oppose 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 are urging an already restive City Council to overrule the mayor — by rejecting the property tax increase and shrinking 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.

“Property taxes are skyrocketing. We can’t afford to continue to have property taxes skyrocket. 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,” Lavin said.

And TIF funds, he 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.”

Emboldened by Johnson’s anemic job approval ratings, the City Council has already voted twice to tie the mayor’s hands when it comes to canceling the ShotSpotter contract. They have denied Johnson his first choice to chair the Zoning Committee and forced the mayor to cast two tie-breaking votes.

And now, those alderpersons could shoot down the $300 million property tax increase or attempt to shrink it at a time when the Chicago Board of Education has raised property taxes by a combined $324 million over two years, the maximum allowed by a property tax cap.

Labor concessions needed, some say

That would force the mayor 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. 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. I don’t know that any of those conversations have been had,” said Ald. Brian Hopkins (2nd), Johnson’s handpicked chair of the Public Safety Committee.

“A significant property tax increase right now is the wrong choice. … Property values have increased and that’s being reflected on these reassessment notices. People are already primed for a tax rebellion. You’re gonna come into that environment with a significant property tax increase proposal? It’s folly. I don’t see how he gets 26 votes.”

Workforce Development Committee Chair Mike Rodriguez (22nd) pointedly refused to comment on the prospect of mandatory furlough days, saying only that 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.’ That’s why it’s important. ... 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 Maria Hadden (49th) also is demanding that Johnson earmark $5 million for a “Childcare for All” pilot program; $40 million for violence prevention programs and nearly $32 million for a variety of housing and homelessness support programs, though none of that is in the proposed budget.

“The no-layoffs piece is huge. Once we start impacting the bottom line of our taxpayers, that puts us in trouble. 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,” Hadden said.

Path of least resistance?

Yet another influential alderperson, who asked to remain anonymous, said it’s obvious Johnson chose the political path of least resistance.

“Their relationships with Council are in the tank. They have no juice. … 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.”

Chicago Federation of Labor President Bob Reiter did not return repeated phone calls.

Reiter drew a line in the sand earlier this month after Johnson ordered city department heads to draft layoff lists to save an additional $75 million.

“We stand ready to collaborate with the mayor's office to identify potential cost savings and progressive revenue solutions that will protect both services and working Chicagoans,” Reiter told the Sun-Times that day.

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.

He did that by making a combination of structural changes and relying on some of the same one-time fixes he used last year took to avoid a post-election property tax increase.

The record $570 million TIF surplus will generate $311 million for CPS, $11 million of that for capital. The city gets $132 million.

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; elimination of the two cents-a-bag “retailer commission” tied to the city’s bag tax and changes bringing “uniformity” to a parking tax that now varies between valet services and self-park and weekends and weekday.

The city will save $150 million by shutting down designated shelters for newly-arrived asylum seekers and operating one 6,800-bed system for everyone experiencing homelessness and $175 million by shifting from the city to the Chicago Public Schools a pension payment for non-teaching school employees. The Chicago Board of Education has not yet approved the $175 million pension payment. The former seven-member board approved a $9.9 billion CPS budget that did not include that payment before it resigned en masse.

Johnson said it will be up to his newly-revamped school board to “grapple with” the question of whether the record TIF surplus eliminates the need for a high-interest $300 million loan that embattled Schools CEO Pedro Martinez and the old board emphatically opposed.

“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.

The $2 billion-a-year Chicago Police Department budget will increase for the second straight year, largely to accommodate the 5% pay hike Johnson used to extend and sweeten the police contract negotiated by former Mayor Lori Lightfoot.

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.

In the run-up to the mayor’s budget address, Ferguson laid out a smorgasbord of revenue-raising and cost-cutting options to fill the combined, $1.2 billion shortfall this year and next. He urged Johnson to make a property tax increase the “last resort" at a time when homeowners are reeling from skyrocketing reassessments and the “suppressed value” of commercial property, particularly downtown, has “pushed the burden” to residential property. In fact, Ferguson argued that a property tax increase long regarded as the third rail of Chicago politics was “not needed."

Now that Johnson has ignored that advice, Ferguson said he “fears for what the consequences” will be.

“With the reality that the unit of government with greatest amount of need for property tax for its baseline operating expenses is CPS and that itself it teetering on a fiscal cliff as well, maybe we are at a tipping point where people say, `Enough is enough. I can’t bear this burden anymore,’ “ Ferguson said.

If ever there was a “shared sacrifice, distributing-the-burden moment,” this is it, but that would take political courage that Johnson has not demonstrated for fear of alienating 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 sister to say, `I need you to be part of the solution to put us all in a better place going forward,’ “ Ferguson said.

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.

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 to say nothing of their demand for 20 more ambulances and paramedics to staff them.

Johnson and his budget team did not disclose how much money they’ve set aside for retroactive pay raises. Under Lightfoot, that cost was $95 million for 2022 alone.

The Civic Federation’s belt-tightening options had ranged from requiring city employees to take one unpaid day off every two week pay period while city executives take a 10 percent pay cut to eliminating more than 3,000 “dormant” city vacancies, suspending both “non-critical” capital spending and a supplemental pension payment that amounted to $307 million in 2024.

The supplemental pension payment over and above actuarial requirements was initiated by now-former Mayor Lori Lightfoot to rave reviews from Wall Street rating agencies. Johnson continued it in his first budget, but now proposes shrinking that advance payment 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. There’s also $9.6 million to help 600 artists, neighborhood festivals and cultural organizations across the city.

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.”

It’s possible using the TIF surplus might impact “some dream in the future,” Johnson said, but "that’s not how we do government. It’s not just a wish list. It’s a lot more sophisticated operation.”

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 said.

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 non-essential 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.”