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Chicago Tribune
03-08-2025
- Business
- Chicago Tribune
Mayor Brandon Johnson, facing a yawning budget deficit, could be in for a fight with corporate tax proposals
By opening the door to a pair of polarizing corporate taxes, Mayor Brandon Johnson could galvanize a progressive base itching to see him deliver on a campaign promise to 'make the ultra-rich pay their fair share,' but also infuriate business opponents already set on defeating him in 2027. Facing a more than $1 billion deficit and having disavowed a property tax hike, Johnson last week said he would consider the return of a per-employee 'head tax' on businesses or a much bolder payroll expense tax. Either would be a major shot across the bow of the city's corporate class. He told reporters Tuesday his administration would take a serious look at how 'individuals with means, particularly our billionaires and the ultra-rich who have benefited from a growing economy, can put more skin in the game' by contributing to the city's violence reduction and affordable housing efforts. Johnson and his allies described both business taxes as just two of the numerous options the mayor is considering that might eventually be included in his budget proposal this fall. A mayoral working group of business and labor officials, aldermen and administration leaders has been meeting regularly behind closed doors to come up with fresh revenues and efficiencies after Johnson said he won't push a property tax hike for 2026, which had dim prospects of passing the City Council anyway. The mayor's office late last week shared its estimates for what nearly three dozen new or expanded taxes, fees or revenue schemes might raise. The payroll expense idea emerged from a new think tank with ties to Johnson called the Institute for Public Good. Johnson cited figures about Chicago's concentration of millionaires and billionaires from the group's late July report, though the source of those figures has been criticized as unreliable. Launched earlier this year, the nonprofit is led by Julie Dworkin — former head of the Chicago Coalition for the Homeless and a leader of the 'Bring Chicago Home' campaign that was a key Johnson initiative — and Ishan Daya, a community organizer who Johnson initially tapped for his budget working group. Daya stepped down from the group after facing backlash over a past video of him tearing down a poster of an Israeli hostage kidnapped by Hamas. He was replaced by Dworkin. In their report, they proposed a new 'corporate excise tax' that would charge businesses with more than $8 million in annual payroll in Chicago. The rate would be 5% of the cost of payroll for employees who earn more than $200,000. The group estimates, based on census data, that the tax could boost the city's annual revenues by $1.5 billion. An Illinois Department of Revenue spokesperson said the agency does not collect information with enough granularity to estimate precisely how many businesses in Chicago have payrolls over $8 million or employees with individual incomes exceeding $200,000. But based on the most recent and complete income data the state does keep, which includes wages but also pension distributions, investment returns and other benefits, just over 93,000 individuals in Chicago in 2022 reported income above $200,000. 'It seemed like the only options floated were having to massively raise property taxes or cut tons of jobs and city services. So we wanted to come up with a third way,' Dworkin said. The tax would be well timed, Dworkin argued, after the 2017 federal Tax Cuts and Jobs Act reduced the corporate tax rate to a flat 21% rate from a top rate of 35%, and delivered the steepest savings to high earners. Soon after Johnson publicly entertained the excise tax idea, the business community pushed back, suggesting that implementing such a tax would not only deter new business and spur relocations out of the city, but would also be unconstitutional. 'If I'm a business and I'm more mobile or making a decision on whether to come to Chicago, I'm considering what's going on on the local level,' said Jack Lavin, the president of the Chicagoland Chamber of Commerce. With outside business-backed groups such as Common Ground Collective and One Future Illinois already gearing up to oppose progressive proposals, Lavin said the defeat of Bring Chicago Home and Gov. JB Pritzker's graduated income tax shows that the broader business community 'is better positioned' to win the messaging battle with the public. 'I also think taxpayers in general are tired of the constant increase in taxes and (thinking), 'What are we getting out of it?'' Lavin said. But Ald. Anthony Quezada, 35th, a mayoral ally, countered that progressive proposals are popular and that 'folks are tired' of 'nickeling and diming small businesses or homeowners or consumers.' Aldermen largely refused to go along with Johnson's proposed increases to city fines and fees for this year's budget, nixing a garbage collection cost hike and a bump to the alcohol tax, and forcing the mayor to completely abandon a property tax hike. They did agree to add parking and plastic bag charges, and went along with the mayor's additional speed cameras to help close the deficit. This year, most aldermen concede they must pair any new revenue with some cuts or efficiencies. It's not only a political necessity to win over the public, but a fiscal reality that neither cuts nor revenues alone could fill the gap. According to a memo distributed to aldermen Thursday and provided to the Tribune, city officials estimated a garbage fee increase could net anywhere from $19.6 million to just under $300 million, depending on the rate. The city's current garbage collection program, which charges $9.50 a month per dwelling unit, runs a $160 million deficit. But for some aldermen, increasing that charge could cause more of a political uprising than raising the property tax levy. An additional liquor tax could bring in between $30 million and $90 million, according to the memo, while charging the sales tax rate on services like haircuts or accounting would net between $78 million and $305 million, but would require a state law change. Charging tax on online sports bets could bring in between $8.5 million and $17 million, the memo notes. The administration did not endorse any specific proposal. Ernst & Young is also looking for ways the city can recover the costs of hosting special events and changes to city fines and fees 'to promote fairness and revenue generation.' Johnson touted a midyear budget report released Wednesday as 'a clear turning point' for city finances, pointing to stabilizing revenues and a drop in operating costs. A day later, his administration enacted a hiring freeze 'to manage costs responsibly and support core service delivery,' according to a memo shared with the Tribune. The new hiring freeze follows a similar cost-cutting measure used by the city last year. It allows for hiring in many revenue-generating and safety-related roles, but suspends non-essential travel and overtime for non-public safety jobs. While Quezada said he wanted time to vet the institute's corporate tax proposal, he appreciated efforts to find money to continue investing in violence prevention, mental health and affordable housing, rather than searching for cuts. 'We really need to shift the narrative away from austerity and decay to growth and investment. Progressive revenue streams like this, bold ideas like this, start a really productive conversation,' Quezada told the Tribune. The institute's pitch is modeled after Seattle's JumpStart 2020 payroll expense tax but the group roughly doubled the highest rate there to come up with its tax dollar estimates for Chicago. Today, Seattle charges businesses with payroll expenses over $8.8 million and at least one employee earning more than $189,000. The tax is applied to the total annual compensation paid in Seattle. Rates range between 0.7% and 2.557%, depending on total payroll. JumpStart brought in $293 million in its first year and $360 million in 2024. The tax is expected to bring in $430 million this year and $451.5 million next. Grocers and independent contractors are exempt. But the tax there can be subject to significant swings: Seattle's budget office said about 70% of revenues from the tax are paid by just 10 companies. Most are in the tech sector, making returns especially volatile during layoffs or stock market fluctuations, 'since stock grants represent a notable share of total compensation for technology workers.' Dworkin said McDonald's, Mondelez, United Airlines, as well as major local banks, law and real estate development firms would likely be the ones to pay here. JumpStart passed following a yearslong push to tax Amazon. It garnered significant pushback from the city's Chamber of Commerce — including a lawsuit — and other downtown business groups that argued the charge was an income tax 'masquerading as an excise tax.' Like Chicago, Seattle is constitutionally barred from charging its own income tax. JumpStart backers successfully argued the program isn't an income tax because businesses were barred from passing the tax onto employees, and the chamber dropped its appeal in the summer of 2022. Collections continued throughout the court fight. Lavin and others predicted a similar Chicago tax, if passed, would end up in court. 'It's an income tax, so I don't think it's constitutional; it certainly will be litigated,' Lavin said. The mayor's office told the Tribune it is conducting a legal analysis of the institute's proposal and different potential iterations. A far more modest proposal — which is nevertheless also receiving business pushback — is returning the corporate head tax. Nixed by the Chicago City Council under former Mayor Rahm Emanuel in 2011, Johnson said Tuesday the idea was back on the table. Back before it was scuttled, companies with 50 or more employees who earned at least $4,300 every three months were required to pay a $4-a-month tax for each of those workers. The juice from the head tax may not be worth the squeeze for Johnson: The city estimates charging $5 per employee today would net just over $25 million, which wouldn't put a significant dent in a $1 billion deficit. Johnson said the administration has also 'been looking at' a PILOT, or payment in lieu of taxes, program, as well as a digital ad tax. PILOT programs seek to get nonprofit entities like hospitals, universities, religious and cultural organizations that don't pay property taxes to voluntarily contribute to city coffers. One of the country's most successful PILOT endeavors is in Boston, which by 2023 raised $35.7 million in cash contributions. But Boston's success took years to build up and relied on individual negotiations with entities. Replicating that in Chicago would not only take time, but it is complicated by federal funding cuts hitting hospitals and universities. Despite the initial opposition from the city's business community, longtime Chicago media and political consultant Delmarie Cobb said the mayor could have success with the suite of progressive taxes. 'I think, if the mayor presents it correctly, that progressives will get behind it because this is the kind of creative thinking that we have been asking for,' she said. Emanuel 'didn't get rid of (the head tax) because he cared about poor people, he did it so his rich friends would feel good about him,' Cobb said. Progressives 'need to have that same kind of aggressive thinking and action when it comes to generating money and making sure that the people who suffer the most as a result of it aren't the people that can afford it the least.'
Chicago Tribune
25-07-2025
- Business
- Chicago Tribune
Mayor Brandon Johnson pledges no push for property tax hike after CFO recently called one ‘likely'
Mayor Brandon Johnson is now ruling out seeking a property tax hike in his upcoming budget proposal, an apparent shift in course for his administration after a top city official said earlier in the week that they probably would do so. On Friday, Johnson said he will instead try again to tax the city's wealthiest residents and corporations. He added that he has 'a number' of ideas for progressive revenue, but did not answer when asked to share them. 'The ultra-rich in this city and this state have an opportunity to do a better job in investing in our infrastructure, investing in community safety,' he said. Johnson told the Tribune that 'nothing has changed' when asked about the apparent abrupt switch-up during a news conference. The mayor's attempts to raise property taxes to balance this year's budget were roundly rejected by aldermen. But he said he isn't turning away from property taxes to close the 2026 budget hole because he's worried he doesn't have the votes. 'We've always made it very clear from the very beginning that we are going to invest in people and use progressive revenue to ensure that we build the safest, most affordable big city in America,' he said. Just Tuesday, Chicago's Chief Financial Officer Jill Jaworski said 'it is likely that that will be part of the package' when asked about the mayor calling for a 2026 property tax increase. But the mayor delivered a clear rejection of the idea Thursday. 'I will not be proposing a property tax increase in my budget. I'm going to continue to work hard to find progressive revenue,' he told ABC-7 Chicago. The mayor similarly did not specify Thursday to ABC-7 what new taxes and other revenue-raisers he hopes to rely on to balance the city's budget. He also said it was too early to discuss potential furloughs and layoffs, adding 'our workforce is what makes our city strong.' The 2026 budget fight will begin in earnest after Labor Day. Johnson, who campaigned promising to not raise property taxes, proposed last year that the city raise them by $300 million to help close a budget gap near $1 billion. Aldermen rejected the plan in an unprecedented 50-0 vote. The mayor's administration then tried to negotiate several smaller property tax hikes with aldermen, but was rejected each time. The City Council's decision, alongside Johnson's opposition to city service and workforce cuts, resulted in a compromise to balance the budget with a fleet of smaller taxes and fees. The largest was a roughly $130 million hike to the personal property lease tax on cloud computing services, a move that affected software services, including many that businesses rely upon. Johnson notably failed in an earlier effort to tax the rich in 2023 when the 'Bring Chicago Home' plan lost in a citywide referendum. The proposal would have hiked taxes on real estate transfers over $1 million to raise money to pay for homelessness services. Many aldermen fear the sort of kitchen-sink approach they used to land the budget last year will be harder to use this year. Several easier-to-tap options have been exhausted, and the city's fiscal challenges have only grown as federal funding cuts threaten the city's already precarious financial position. Johnson's top budget officials have long described property taxes as an effective way to bring in predictable, long-term revenue and stabilize the city's budget. But in ruling out property taxes as part of the package this fall, the mayor may very well have sensed a trial balloon had popped after several aldermen quickly criticized the idea this week.
Chicago Tribune
23-07-2025
- Business
- Chicago Tribune
Mayor Brandon Johnson's CFO says property tax hike ‘likely' in 2026 budget
Mayor Brandon Johnson's team teased plans this week to take another swing at raising property taxes to close the city's more than $1 billion budget gap, despite an aldermanic revolt last year and continued resistance to such a hike. Asked in an interview with Bloomberg's Romaine Bostick whether a property tax increase would again be proposed for the city's 2026 budget, Chief Financial Officer Jill Jaworski said 'it is likely that that will be part of the package,' without addressing how to garner support from the City Council to pass it. One of Johnson's 'budgeteers' last year, Ald. Matt O'Shea, 19th, said he would need to see major cuts and efficiencies to be won over. 'And if it doesn't happen, I'm a no vote, and so are the majority of my colleagues,' he said. 'We need to start talking about stuff we never talked about before.' Jaworksi affirmed cuts will also be part of the mayor's budget package, but said the administration is 'hoping to avoid' reducing services. She suggested the city would be addressing a chief complaint from the business community about the unpredictability of property taxes. 'You're thinking about investment, uncertainty is the enemy, right?' It's a similar line to the one Mayor Lori Lightfoot used when she successfully proposed tying annual property tax hikes to 5% or the rate of inflation, whichever was lower. Johnson, who campaigned against raising property taxes and instead pitched other progressive revenues, backed off of Lightfoot's policy in his first budget, only to renege last year amid a nearly $1 billion deficit. Aldermen preemptively voted against that hike. The final budget instead included a bigger share of one-time fixes — including using federal pandemic dollars and prior-year surplus — to close the gap. Ratings agencies that help determine how much the city will owe on debt have cited a lack of progress finding 'permanent and high impact solutions' to close its budget gap as black marks. Property taxes are among the most stable and predictable revenues the city can raise on its own. Fitch also dinged the city earlier this year for its pursuit of other revenues 'that require state or voter support, which do not appear to be forthcoming in the near term.' Jaworski has argued the state should legalize taxing services. Johnson has called for taxing the rich, but since the failure of the 'Bring Chicago Home' referendum, has not proposed how the city would do it. Ald. Brian Hopkins, 2nd, said he appreciated Jaworski's commitment to a balanced budget, but cautioned Johnson's administration to not start discussions by saying a property tax hike is necessary. It is the mayor's job — not Jaworski's — to sell the public on such a tax hike, and a critical part of doing that is showing the math that would make it necessary, Hopkins said. 'People don't want to be told it's inevitable and unavoidable, because they don't believe that,' he said. 'It'll spark a rebellion. People will feel manipulated and like something is being forced down their throats.' While currently opposed to a property tax hike, Hopkins said 'I don't think we can rule out anything.'
Washington Post
02-06-2025
- Business
- Washington Post
Trump rides to the rescue of Chicago's flailing mayor
Two years ago, Chicago voters dumped their unpopular incumbent mayor, Lori Lightfoot, a standard-issue Democratic progressive, and replaced her with Brandon Johnson, who is, if anything, an even harder-left progressive. It was as though voters thought there was only one way to run a city, and they were ready to keep trying until they got it right. Fast-forward to this year, and Johnson's approval rating is 14 percent, according to an Illinois Policy Institute poll in January. Of the 798 registered Chicago voters polled by M3 Strategies, nearly 80 percent had an unfavorable view of Johnson, including 65 percent 'very unfavorable.' Johnson defends his record by pointing to a decline in crime that has been dramatic by some measures — this past April saw the fewest murders in that month since 1962, though violent crime has been declining nationwide. And you might figure a drop in crime should make the mayor's approval numbers rise, not fall close to the level of disdain Americans show for Russian dictator Vladimir Putin (8 percent, according to a Pew Research poll). Beyond crime, the story of Johnson's first two years is a familiar one: lousy public services with a high cost of living exacerbated by seemingly endless tax increases. The Chicago budget passed in December included $181 million in new taxes and fees. These included hiking a cloud services and digital goods tax from 9 percent to 11 percent; raising the streaming and cable TV tax from 9 percent to 10.25 percent; and increasing the parking tax to 23.25 percent. Oh, and adding a $3 ride-hailing surcharge on weekends and increasing the single-use bag tax from 7 cents to 10 cents. Johnson wanted even higher taxes. In 2024, the mayor offered a ballot referendum called Bring Chicago Home that would have raised transfer taxes on properties that sell for more than $1 million and used the revenue to fund homelessness programs, but 52 percent of voters rejected it. When Johnson was a mayoral candidate, one of the few areas where he didn't want to raise taxes was property taxes, and no wonder. The Civic Federation, a nonpartisan local research organization, noted in a report last fall that 'a taxpayer in the City of Chicago pays property taxes to 7 or 8 local governments, depending on which part of the City they live.' (Those local governments include Cook County, the city of Chicago, Chicago Public Schools, City Colleges of Chicago, Chicago Park District, Forest Preserve District of Cook County and the Metropolitan Water Reclamation District. Chicago residents living south of 87th Street also pay property taxes to the South Cook Mosquito Abatement District.) But despite Johnson's campaign promise, he proposed $300 million in property tax hikes in October that the City Council unanimously rejected. After the defeat, the Wall Street Journal editorial board called Johnson 'America's worst mayor.' In Johnson's defense, at the time of that editorial, Los Angeles Mayor Karen Bass (D) had yet to be photographed posing for photos at a cocktail party in Ghana while the Palisades Fire was torching a good chunk of her city. This is why we need a playoff system. Living in a big city almost always costs more than in the suburbs or rural areas, but Chicago's city government seems dead-set on wringing money from residents in every way imaginable. Now, they are rationally concluding that the mayor and his administration aren't delivering. With such an abysmal approval rating and no sign of Johnson reconsidering his governing philosophy, you might think it would take a miracle to resuscitate his popularity and political future. Well, that miracle seems to be arriving in the form of the U.S. Justice Department. On May 19, Assistant Attorney General Harmeet K. Dhillon wrote to Johnson, informing him that the Justice Department is investigating his administration to see if it 'engaged in a pattern or practice of discrimination based on race.' The day before, in a speech at the Apostolic Church of God in Chicago's Woodlawn neighborhood, Johnson boasted that his deputy mayors, budget director, chief operations officer and senior advisers were Black, and added, 'When you hire our people, we always look out for everybody else. We are the most generous people on the planet.' That's a thin reed on which to base an accusation of racial discrimination in city hiring, and you're forgiven if you doubt that's the wisest use of Justice Department resources. (If prosecutors can prove that the city is turning away qualified applicants because of their race, that's a different story.) It isn't as if bringing down a Democratic mayor would boost Republican prospects in Chicago; Donald Trump received just 28 percent of the vote in Cook County in November, his worst performance in any Illinois county. If anything, the Trump administration is helping Johnson by going after him; few things could make Chicago Democrats instinctively unite like an attack on the mayor by this White House. If Johnson's numbers improve and the severely underperforming mayor tightens his grip on City Hall, that will ensure Chicago remains a prime example of progressive failure. Perhaps that would be Trump's ultimate, if unintended, revenge on Chicago voters for preferring Kamala Harris to him — getting them to sign up for four more years of Johnson's mismanagement.
Chicago Tribune
28-05-2025
- Politics
- Chicago Tribune
Laura Washington: Keep at it, mayor. Equity is the best tool you have against the White House.
Mayor Brandon Johnson is scrambling to beef up his Black bona fides. His moves have backfired. A cardinal rule of politics is that, if you lose your base, you're gone. Halfway through his first term, Johnson is laboring diligently to shore up his support among Black voters. That has put him crosswise with President Donald Trump. Johnson is bogged down by polls that show his popularity has plummeted. For example, a massive 79.9% of respondents disapproved of Johnson's performance in office, according to one survey of 700 likely Chicago voters taken in late February. Only 6.6% of voters viewed Johnson favorably, and about 12% of respondents said they had a neutral opinion of the mayor, according to the poll by M3 Strategies. Johnson's weak performance has brought out the knives. Two political organizations have vowed to fight the mayor and his progressive allies. Chicago Forward, a group of city business leaders, helped torpedo Johnson's prized Bring Chicago Home referendum. Its political consultant, Greg Goldner, told the Chicago Tribune that the group will continue to pound away at Johnson and his supporters. A 'dark money' group called Common Ground Collective has raised $10 million and is targeting aldermen who are close to the mayor, the Tribune reports. So, it's back to the base. Johnson won City Hall by besting opponent Paul Vallas in the 2023 mayoral runoff, taking every one of the city's African American wards. Now, Black voters are grumbling. They want more city services and social service programs directed to their neglected neighborhoods. They complain about the hundreds of millions of dollars the Johnson administration has plowed into supporting immigrants and refugees. They clamor for job and recreational opportunities for African American youths. Johnson is hitting Black churches, appearing regularly on Black radio and at events on the city's South and West sides to tout his record. On a recent Sunday, Johnson boasted about his hiring record at the Apostolic Church of God in Woodlawn. He listed African Americans he has tapped for top jobs in his administration. 'Business and economic neighborhood development, the deputy mayor, is a Black woman,' he declared. 'Department of Planning and Development is a Black woman. Infrastructure, deputy mayor, is a Black woman. Chief operations officer is a Black man. Budget director is a Black woman.' That unforced error blew up in his face. The U.S. Justice Department reacted by launching an investigation 'to determine whether the City of Chicago, Illinois, is engaged in a pattern or practice of discrimination based on race,' in violation of the Civil Rights Act of 1964. In a May 19 letter to Johnson, Assistant Attorney General Harmeet Dhillon wrote: 'Our investigation is based on information suggesting that you have made hiring decisions solely on the basis of race.' Johnson, Dhillon noted, 'highlight[ed] the number of Black officials in [your] administration. You then went on to list each of these individuals, emphasizing their race.' The Trump administration is on a crusade to abolish diversity, equity and inclusion in government, educational institutions and the corporate arena. 'We're not going to be intimidated by the tyranny that's coming from the federal government,' Johnson responded at a news conference. 'The diversity of our city is our strength.' He declared that 'we are going to show up for the Latino community. We're going to show up for Asian Americans. We're going to show up for Black folks in this city. We're going to show up for the LGBTQ+ community. Any group that has been marginalized and has suffered under tyranny and oppression, we're going to show up for them.' The racial makeup of the mayor's office staff is 34% Black, 24% Hispanic, 30% white and 7% Asian, according to data a mayoral spokesperson provided to the media. The latest census data shows that Chicago's population is 39% white, 29% Latino, 28% Black and 7% Asian. Of Trump, Johnson said, 'My administration reflects the country, reflects the city; his administration reflects the country club,' noting that Trump's Cabinet is overwhelmingly white. Our civil rights laws were not designed as racist tools to keep Trump in power. Five years, ago, we were all-in on fighting for racial equity in the wake of the police murder of George Floyd. America's racial awakening was in full swing. Now, we are in what the Chicago Defender has labeled the 'post-Floyd backslide.' DEI is under attack by Trump, who sees diversity as a dirty word, even a crime. Trump doesn't give a whit about fairness; he just wants to preserve and uphold white male dominance. For sure, Johnson erred by leaning heavily into his base at the church event, rather than his overall record of making equity a hallmark of his administration. No need to apologize for that. People of color everywhere despise Trump for his assault on our history, culture and achievements. Keep at it, mayor. The best political weapon you have against the White House is battling for equity. Submit a letter, of no more than 400 words, to the editor here or email letters@
