Johnson proposes $17.6 billion Chicago budget with head tax and borrowing for misconduct settlements

Chicago Mayor Brandon Johnson presented a $17.6 billion spending plan for 2027 last week that would revive a tax on large employers the City Council rejected a year ago.^{1, 2} The plan, which the administration calls the “Fair Share Budget,” aims to close a shortfall of nearly $900 million, FOX 32 Chicago reported.² It includes about $131.5 million in new spending on services such as mental health care, youth jobs, homelessness, libraries and violence prevention.^{1, 2}

The City Council must approve a budget by Dec. 31.² Its Budget Committee will spend the next three weeks questioning city departments about the plan, CBS Chicago reported.³

What the mayor proposes

The largest new tax would charge companies with more than 125 employees $25 a month for each worker.^{1, 2} WTTW News reported that the tax is projected to raise about $100 million, and that businesses whose employees work in areas the federal government designates as socioeconomically disadvantaged would be exempt.¹

The plan would also raise the personal property lease tax, which applies to car and equipment rentals and cloud software, from 15% to 20%, bringing in a projected $234 million, according to WTTW.¹ Other proposals include a 15-cent fee on package deliveries, projected at $9 million, a higher tax on online betting, projected at $37 million, and more bus and bike lane cameras, projected at $18 million, WTTW reported.¹

The city would borrow $481 million to cover the cost of police misconduct lawsuits, including $260.8 million in settlements with 17 men who were wrongfully imprisoned, according to WTTW.¹ Johnson had said in September that the city would not borrow for those costs, WTTW and FOX 32 reported.^{1, 2} Chief Financial Officer Ashlee Gabrysch said the borrowing would be repaid over five to seven years, according to WTTW.¹

The city projected an $882.4 million deficit in September, and with the borrowing, the gap left to close was $652.5 million, acting Budget Director Jonathan Ernst said, according to WTTW.¹ Johnson will also ask the council to declare about $520 million in tax increment financing funds a surplus, with about $286 million of it going to Chicago Public Schools, WTTW reported.¹

The new spending includes $24 million for 7,000 youth jobs, $30.9 million for libraries, $15 million for homelessness services and $13 million for rental assistance, according to WTTW.¹ The plan adds $7 million for 390 street outreach workers and would reopen a city mental health clinic, WTTW and FOX 32 reported.^{1, 2} The city’s 2027 pension bill is more than $2.94 billion, and the plan adds $364 million in extra pension payments, WTTW reported.¹

The mayor’s case

Johnson, in his fourth budget address, presented the plan as a choice between the status quo and asking the wealthiest to pay more, WTTW reported.¹ He cast it as a continuation of Mayor Harold Washington’s 1986 “fair share” budget and said that “our city reverted to prioritizing corporate profits and measuring success by number of cranes in the Loop.”¹

“There is no reason to coddle or feel sorry for corporations,” Johnson said.¹ “They are doing just fine.”¹ He said the employer tax could encourage businesses to locate in long-disinvested parts of the city that have few large employers, according to WTTW.¹ “Let us plant the seeds of a fair Chicago,” he said.¹

The council’s response

“The mayor did not learn from last year,” said Brendan Reilly, the 42nd Ward alderman, who called the address a “nice campaign speech,” WTTW reported.¹ Council members who opposed the employer tax last year called it a “job killer” that was “dead on arrival,” according to WTTW.¹ Anthony Beale, the 9th Ward alderman, accused Johnson of “bailing out CPS,” the station reported.¹

Andre Vasquez, the 40th Ward alderman, said he would look at the interest cost of the borrowing before deciding, and several aldermen said they would not vote to raise the lease tax again, according to WTTW.¹

Hearings begin

Budget hearings before the council’s Committee on Budget and Government Operations start Monday, ABC7 Chicago reported.⁴ The first session includes representatives of the Budget Office, the Department of Finance and the chief financial officer’s office, with time for public comment beforehand, and the hearings continue through Thursday this week, with the Chicago Police Department scheduled for Wednesday, CBS Chicago reported.⁵

A group of 29 alderpeople says the employer tax would hurt job growth and discourage companies from coming to Chicago, according to CBS.⁵ “We will fight any taxes that are a direct disincentive to growth,” said Jack Lavin, president and CEO of the Chicagoland Chamber of Commerce, according to ABC7.⁴ “This fight is about so much more than just one tax,” Johnson said, according to the station.⁴ “It’s about who gets to share in Chicago’s prosperity, who gets a fair shots at opportunity.”⁴

Survivors of police abuse and wrongful convictions, their families and community groups planned to gather at City Hall before Monday’s hearing to urge alderpeople to support the plan, including the money for police misconduct settlements, CBS reported.⁵ The advocates support borrowing to cover the settlements and argue that settling cases sooner would compensate people who waited years and limit legal costs without cutting community services, according to CBS.⁵

What happens next

Last year, a nearly veto-proof majority of the council refused to approve the employer tax, and Johnson let the 2026 budget take effect without his signature, according to WTTW.¹ Johnson is running for reelection, WTTW noted.¹