When Brandon Johnson ran for mayor two years ago, he did so on the strength of an expansive progressive agenda.
His vision for equity in housing, schools, neighborhoods and downtown would come at a cost, we all knew. But not to worry, Johnson told voters, he had plans to pay for it.
There would be a “millionaire’s tax” on the sale of costly homes. A head tax based on how many people a company employed. A commuter tax. A transaction tax on securities trades. An income tax on people with big paychecks.
Altogether, Johnson figured, it would add up to around $800 million a year in new revenue.
The beauty of the package, politically for Johnson, was that common voters reasonably could assume his costly ideas for progressive city government would come at someone else’s expense.
At this point in his tenure, though, Johnson’s big revenue plans have mostly come to naught.
That hasn’t stopped Johnson from moving ahead on his progressive agenda. And that gap — between revenue dreams that crashed and spending plans that moved forward anyway — helps explain the nearly $1 billion shortfall Johnson now faces as he draws up his 2025 budget.
The budget cliff is exposing the fact that Johnson has little idea of how to pay his growing bills and now likely must consider tactics, such as a property tax hike or other unpalatable measures, once considered off-limits.
The cost of Johnson’s agenda has added up quickly, in part because he has little stomach for efficiencies and cost cuts, yet deep pockets when it comes to personnel.
For example, Johnson in his early days as mayor doubled the cost-of-living increases to police pensions, at a cost of around $60 million a year. That came on top of a law passed before Johnson became mayor — sponsored by a state senator he would appoint as his deputy chief of staff — that boosted firefighter pensions similarly.
Johnson has forgone revenue opportunities, too. He has done without an automatic property tax increase, tied to inflation, that Mayor Lori Lightfoot had enacted but also not implemented in her last budget. Based on current inflation rates, the escalator might have added somewhere around $50 million a year in new revenue this year.
The mayor has announced plans to retire Chicago’s tax increment financing districts, declaring TIFs a wrongheaded economic development tool that worsens inequities among city neighborhoods. But instead of banking around $100 million a year Chicago typically receives from surplus TIF funds while TIFs still exist, Johnson instead has pledged that money to back the sale of $1.25 billion in new bonds devoted to fund his equitable economic development agenda.
Voters put Johnson on the fifth floor of City Hall on the strength of his progressive promises and those far-fetched plans to pay for them with someone else’s money. The billion-dollar budget gap is a measure of how short he has fallen on the second part of that pact with the public.
Now Johnson has a few weeks left before he’s due to present his plans for a balanced budget to the City Council.
It seems almost a foregone conclusion that a property tax hike — well larger than the one indexed to inflation — will be in the plan. This would break a “read my lips”-style campaign promise, but Johnson likely has no choice.
Beyond that, other prescriptions are anybody’s guess. It’s doubtful Johnson as mayor can bring any of his fantastical plans as a candidate back to life. He has shown little ability to push tough votes through the City Council, much less state government.
With so much pressure bearing down on Johnson and his budgeteers, it’s time for a high state of pocketbook alert. The credit rating agencies are watching. Standard & Poor’s withdrew a “positive” outlook for Chicago early this year, warning that any structural changes — including skimping on pension payments or dipping into cash reserves — could be cause for negative action.
Keep an eye on pensions. The city owes a $175 million pension payment for nonteaching employees of Chicago Public Schools. The school board has refused Johnson’s bid to force CPS to pick up that cost, but Johnson may be tempted to pretend as if the city won’t pay the tab either.
Chicago in recent years has made supplemental pension payments in efforts to pay down its monstrous pension debt — to the tune of $227 million already earmarked for 2025. Johnson may well receive wrongheaded advice to sharply cut or eliminate the surplus payment.
A return to his predecessors’ scoop-and-toss borrowing tactics — refinancing existing debt, using the proceeds immediately and paying the bills later — likely will be discussed. But with interest rates still hovering near recent highs, a scoop-and-toss plan now would be even less defensible than usual.
In prior administrations, the answers to even severe budget challenges were already shaping up by this point. Trial balloons could be seen floating over City Hall.
So far, Johnson’s administration has sent only the dimmest of signals. An emergency hiring freeze and other cost-reduction measures this week foreshadowed even more painful economy measures sure to come. The mayor’s refusal to answer questions about a possible property tax hike lent to an expectation that such a move is in the works.
In normal times, a blackout on hints of budget measures might be seen as a sign of strict discipline within the mayor’s administration — a keep-your-heads-down approach while the planners are hard at work.
But consider what has happened just in the last week. Much of Johnson’s intergovernmental affairs team quit en masse. An alderman claimed he had the votes to beat Johnson’s handpicked choice for chair of the City Council’s powerful Zoning Committee, signaling Johnson’s inability to drive his agenda through the council. Gov. JB Pritzker made clear there is no communication with City Hall about any state funds to help balance the city’s budget.
Instead of quiet, purposeful work, City Hall just now seems riven by chaos — with Johnson estranged from Springfield and at odds with much of the City Council.
As if a $1 billion hole in the 2025 budget forecast weren’t drama enough.
David Greising is president and CEO of the Better Government Association.
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