Mayor asks City Council to approve massive new progressive revenue to close city’s $1.18B budget gap

CHICAGO (WGN) — To close Chicago’s staggering $1.18 billion budget gap, Mayor Brandon Johnson doubled down on his investments and presented a budget he says will protect the city from Trump administration cuts.

Vowing to challenge the ultra-rich, Johnson unveiled a budget relying on cost-savings and new taxes on corporations.

“The intense and growing wealth inequality is not sustainable, you all, for our city. We cannot separate the immense wealth of the few for the poverty and insecurity of the many,” Johnson said.

The mayor is not, however, pursuing a property tax hike or an increase in the garbage collection fee, and the deadline for city leaders to pass a grocery tax has come and gone.

Johnson presented his budget to City Council late Thursday morning. The city’s nearly $1.2 billion budget shortfall for 2026 is slightly higher than original estimates.

To bridge the gap, the ultra-progressive mayor will ask City Council to tax the wealthy and corporations that he thinks aren’t paying their fair share.

“Look, Chicago is the 10th-wealthiest city in the entire world,” the mayor will say, according to prepared remarks.  “We have 127,000 millionaires. We have 290 hundred-millionaires, and we have 24 billionaires. At the same time, one in four Chicagoans under the age of 18 lives in poverty.”

To raise $100 million for anti-violence programs, Johnson is asking alders to revive a corporate head tax. Called a “community safety surcharge,” companies operating in the city with more than 100 employees would pay $21 per person every month.

The revenue — $100 million – would be dedicated to anti-violence programs. 

Former Mayor Rahm Emanuel eliminated that tax after a more than 40-year run in Chicago.

Johnson is also proposing a brand new tax on social media companies in which platforms would pay 50 cents for every active user after 100,000. The mayor’s team believes that could raise an estimated $31 million, which would be used to pay for city-owned mental health clinics and expanded crisis response teams.

In addition to hiking taxes on cloud computing, boats docked at city harbors and expanding congestion fees on rideshares, the mayor is also proposing a new online sports wagering tax and a new Hemp tax. 

In total, the mayor’s progressive revenue proposals would raise $586.6 million. 

“We are asking large corporations and big tech companies that have made trillions of dollars to pitch in a little bit more,” Johnson said.

As for cuts, the mayor’s team says it has found $200 million in savings across city departments, but the former union activist turned politician is not proposing operating layoffs.

Rather, to further cut spending, the budget extends a citywide hiring freeze and consolidates some city office space.

Johnson is also proposing a cap on overtime for Chicago police officers. The mayor says he wants to modernize the police department and freeze vacancies not likely to be filled. Part of the overhaul includes transitioning sworn positions that perform civilian functions to civilian roles. 

In what’s likely to be scrutinized by independent budget watchers, the mayor is proposing that the city make a partial advanced pension payment of $120 million, and he’s pursuing bond issuances to fund infrastructure and realize savings. Chicago pension funds remain woefully low, and the city has been trying to catch up with advanced payments. 

Johnson will also declare a $1 billion TIF surplus, a large chunk of which would be headed to Chicago Public Schools. 

After the mayor’s address, his progressive allies sounded upbeat.

“The people that we work with, the communities that we are accountable to, they’ve been pushing for progressive revenue sources for decades,” Ald. Maria Hadden (49th Ward) said.

Other alders, however, said the mayor’s budget needs a rewrite.

“We need to make sure that we are cutting, getting to the efficiencies that are important first for our taxpayers,” Ald. Scott Waugespeck (32nd Ward) said.

“We need to be looking to grow the size of the city and what is preventing this city from growing is a lack of jobs and a lack of housing,” Ald. Bill Conway (34th Ward) added.

As budget season kicks into higher gear, the mayor will make the case that his proposals will help protect Chicago from Trump administration cuts. 

“We are making these historic investments because the Trump cuts will have a real impact on the poor and working people of Chicago, and they will degrade the quality of life for all Chicagoans,” Johnson said.

The mayor’s budget team has been holding small group budget briefings. Next week, the full Council will get a close look at the mayor’s proposal.

‘Everything needs to be on the table’

Prior to the mayor’s budget address Thursday, some city leaders said everything should be on the table to close Chicago’s budget gap, including a property tax increase.

It’s the second straight year Johnson and elected city leaders are trying to figure out a way to fill a giant hole in the city’s budget. They faced a nearly $1 billion gap in 2025.

“Everything needs to be on the table, including property taxes, this time around,” Ald. Leni Manaa-Hoppenworth (48th Ward) said prior to Thursday.

But property taxes were not expected to be part of the formula for this budget cycle, and that turned out to be the case. The mayor pitched a property tax hike last year, but City Council members unanimously rejected the $300 million dollar increase.

“There’s no will among taxpayers, or alders who are listening to taxpayers, to have a property tax increase when you have a mayor who is spending like an out-of-control person,” Waguespack said previously.

Johnson already took steps to reduce spending by instituting a city hiring freeze and telling department heads to prepare for a 3% to 5% cut to their budgets. The mayor spoke about some of his budget proposal last week, and he stuck to his word in Thursday’s budget proposal.

“I’m going to keep to my word,” Johnson vowed last week. “I’m going to present a budget that challenges the ultra-rich to pay their fair share of taxes. I’m going to challenge that.”

Johnson was also expected to propose reinstating the corporate head tax, which turned out to be the case. That proposal is sure to met with opposition from at least some city leaders.

“It’s not a good idea when you have a mayor who’s anti-business from day one, and you’re basically saying, ‘We’re going to look for any way we can to tax your employees,'” Waguespack said prior to Thursday.

“It really does a number on businesses that are existing, but it also says to new businesses, ‘Don’t come to Chicago.'”