• Michael McDevitt
    OCT 31, 2024
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    Mayor unveils $17.3B budget proposal as skeptical alderpeople react to $300M property tax hike request

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    Mayor Brandon Johnson delivers his 2025 budget address on Oct. 30, 2024. [Don Vincent/The Daily Line]

    Mayor Brandon Johnson unveiled a $17.3 billion budget proposal for 2025 Wednesday that closes a nearly $1 billion budget gap through some across-the-board cuts and elimination of hundreds of vacant positions but largely relies on a $300 million property tax increase and the city declaring a record tax increment financing (TIF) surplus.

    In an address to the City Council, the mayor said he didn’t make the decision to break a key campaign promise and suggest a property tax increase easily. 

    “It is something that I grappled with for weeks and weeks,” Johnson said. “I directed my budget team to look at all the options at closing this budget gap, and when it came down to either mass layoffs, curbing vital city services, or an increase in property taxes, I would certainly much rather tax the rich.” 

    The mayor said in his speech he’s inherited the results of past fiscal mismanagement and “short-sighted decisions” by other administrations that “have had serious, long-term consequences” on the city’s finances. The mayor also said the limited mechanisms by which the city can increase its own revenue left him with no better options to balance the budget. 

    “This was the best option that I have at this time,” Johnson said during the address. “It allows us to move forward in a sustainable way. This is the start of a multi-year process that will finally get Chicago's finances back on track.”  

    You only get to blame previous administrations in your first year,” Ald. Brian Hopkins (2), who said he won’t support a property tax hike, told The Daily Line. “He's now in his second year. This is his second budget, so I think it rings hollow when you're trying to point your finger at things that happened 15 years ago that aren't necessarily relevant today.” 

    “I do agree that the Skyway and the parking meter deals were bad decisions, but they have little to no bearing on the challenges that we face today,” Hopkins also said.

    “When you came in and you had a small budget gap and it ballooned to a billion, that's on him, that's not on prior administrations,” Ald. Scott Waguespack (32) told The Daily Line. 

    The mayor is proposing the first property tax increase since the 2022 budget. In the 2023 budget, former Mayor Lori Lightfoot chose to ignore a practice she began in the 2021 budget that raises property taxes each year in accordance with the Consumer Price Index (CPI) as the country grappled with high inflation. In Johnson’s first budget, he also declined a property tax increase tied to inflation.

    The $300 million property tax increase represents what the levy would have been if it had increased annually in accordance with inflation from 2019 onward. The mayor’s press office said that will mean property owners will see a 4.8 percent average increase on their tax bills, according to 2023 assessments. Once the 2024 reassessment of Chicago is complete, the press office said that average increase could be different. 

    “I understand that today I'm asking families to lean in yet again and do a little bit more in order to make sure that their neighbors are not laid off and to make sure that we don't have to cut vital city services,” the mayor said during his address. 

    When asked whether he was considering a return to annual tax levy hikes based on the CPI now that the 12-month CPI has hit its smallest rate since February 2021, the mayor declined to say during a briefing with reporters Tuesday. During a press conference Wednesday, he said he’s solely focused on the current budget proposal. 

    The proposed budget would be a 3.2 percent rise from last year’s adopted budget. The mayor’s budget team has said the increase is mostly driven by grant funding and enterprise fund revenues. The city’s Corporate Fund is set to see a 1.5 percent or $85.6 million decrease to $5.6 billion as a result of a reduction in the city’s general financing requirements account. 

    The city plans to declare a record $570 million TIF surplus to return $131 million in revenue to the city and Chicago Public Schools (CPS) set to receive $300 million of surplus revenues.  

    The mayor’s budget team explained during a briefing with reporters Tuesday that surplus can only legally be recaptured from unallocated TIF dollars, meaning no TIF-funded projects with obligated funds will be delayed as a result.  

    “My administration has spent the last year examining every TIF district and worked with our departments to remove projects that are no longer viable while still reserving funding for projects that will benefit our overall city,” the mayor said. 

    Only planned projects that have not been allocated TIF funds could be at risk of a delay. 

    The mayor on Tuesday categorized any affected projects as “some dream in the future that someone may have down the line.” 

    Fourteen alderpeople signed a letter that calls on the mayor to reject the property tax increase idea as well as renew the expired ShotSpotter contract, reject calls from the Chicago Teachers Union to end all of the city’s TIF districts, finalize a contract with Chicago firefighters and refocus migrant spending that the city no longer needs to use as the city’s migrant missions concludes.  

    If the parameters in the letter are not met, the 14 city lawmakers said they will vote no on the budget. Those 14 include Hopkins, Waguespack, Alds. Anthony Beale (9), Peter Chico (10), Marty Quinn (13), Raymond Lopez (15), Derrick Curtis (18), Silvana Tabares (23), Monique Scott (24), Felix Cardona (31), Gilbert Villegas (36), Anthony Napolitano (41), Brendan Reilly (42) and Jim Gardiner (45). 

    Despite being outspoken against the mayor’s cancellation of the ShotSpotter contract, Ald. David Moore (17) was not part of the letter and told reporters he might support the increase if he can point to resources coming to his ward as a result. 

    “[As] long as I'm able to point to something and say, ‘Hey, this is what you're getting for your property tax increases, this is what you're getting because TIFs were swept.’ I’ve got to be able to point to something,” Moore said. “If I can't point to something for my constituents, then I can't support it.” 

    The City Council Progressive Caucus has also made its own series of requests as budget season kicks off. Their requests include a budget free of layoffs that makes investments in community-based violence prevention programs, childcare, rapid rehousing efforts, shelter bed space and funding to provide legal counsel to every tenant facing eviction. 

    Some but not all of the caucus’s requests were highlighted in the mayor’s budget address. The budget avoids layoffs and invests $15 million in community violence intervention — still short of the $40 million the caucus called for — $40 million to expand the city’s shelter system to 6,800 beds and $29 million in rapid rehousing. 

    Ald. Maria Hadden (49), co-chair of the progressive caucus, said she was heartened to hear that the budget doesn’t include layoffs and includes some funding for the programs they had requested. But she said she can’t make a determination on whether she’ll vote for the property tax increase yet without time to look at the numbers and take the proposal back to her ward residents. 

    “Because the mayor is correct. It's a trade off, right?” Hadden said. “If these are the level of services that we want and these are the type of investments that we want, and this is what the cost of that is and we have limited levers of local control and revenue, and this is the revenue solution that he wants to present, then for me ... let me take this to my constituents and see.” 

    Hadden said her residents may decide that a reduction in services is worth avoiding a tax hike. 

    Johnson said the budget includes 3 percent cuts across all departments, the mayor’s office, aldermanic offices and the city clerk’s and treasurer’s offices. While not laying off employees, the budget proposal reduces the city’s headcount by eliminating 743 vacant positions that weren’t “mission critical,” including around 450 largely civilian positions within the Chicago Police Department. 

    Reilly told reporters that layoffs shouldn’t have been taken off the table. 

    “My … concern is that [the mayor has] placed a higher premium on protecting city jobs than protecting Chicago taxpayers,” Reilly said. “Everything needs to be on the table. We're a billion dollars in the hole, and this guy's acting as if all we have to do is just go and squeeze taxpayers more and more.” 

    As the city seeks to exhaust its federal American Rescue Plan Act dollars by the end of 2026, the 2025 spending plan proposes $145 million in ARPA spending. None of it is being proposed to close the budget gap as some alderpeople had expressed interest in. 

    Other revenue increases within the proposed budget include sunsetting the two-cent retailer commission for the city’s plastic bag tax to ensure the city receives the full $0.07 per bag, hiking the alcohol tax, which hasn’t gone up in 16 years, and tasking the city’s law department with cracking down “on scofflaws and corporations that owe the city money” to raise another $30 million. 

    The mayor will still commit to a $272 million supplemental pension payment beyond the city’s statutory requirement, to bring the budgeted total to around $2.9 billion next year. The mayor and his budget team estimate that continuing to make proactive, supplemental pension fund payments will reduce the city's future pension fund contributions by $3.8 billion.

    “I'm committed to protecting security, the retirement security, and upholding our pension obligations,” the mayor said. “In this budget, we are adhering to our policy to make a contribution that ensures our unfunded liabilities will not grow further.”  

    But mayoral ally Ald. Byron Sigcho-Lopez (25) is urging the mayor to instead forgo the payment as part of an effort to avoid the $300 million tax increase, which he thinks will be tough on his constituents.

    Additionally, ally Ald. Carlos Ramirez-Rosa (35) said "the prospect of another property tax increase is a very difficult one for my neighbors," as he represents an area where property taxes have already risen as a result of higher assessed values. "I want to talk to [my ward residents] to figure out how to proceed with this budget."

    Ald. Jason Ervin (28), the council’s budget committee chair, said he didn’t agree with forgoing the supplemental pension payment to avoid a property tax hike, saying that “we got in this situation by not making those responsible decisions” over the past couple decades. 

    Ervin said he’d support a return to mandating the annual tax increase tied to inflation, saying it “makes sense” and that had it been a longstanding practice the city wouldn’t have had to “sell off assets in order to balance the budget.” 

    Ald. Bill Conway (34) said the property tax increase and cuts to police positions make him lean toward not supporting the budget but he’s willing to negotiate and be open-minded. 

    “Let's look at how we can collaborate and compromise,” Conway said. “I pride myself in not being someone who is here to obstruct. I'm here to govern and collaborate.”

    Budget hearings will begin next Wednesday, and the mayor is aiming for a vote in early December. The city must pass a budget by Dec. 31.

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