The calendar has turned to the final month, and, as was the case last year at this time, Chicago’s budget clock is ticking. Thanks to a pragmatic rump group of aldermen, though, there’s now reason for hope when it comes to the birthing of the 2026 budget.
As readers will recall, the budget chaos last year — which featured multiple rejections by aldermen of Mayor Brandon Johnson’s proposals for property tax hikes — led to the first downgrade of Chicago’s credit rating in a decade. It is an urgent priority, then, to forge a budget that preserves the city’s credit, now sitting just two uncomfortable notches above junk status.
The group of 26 aldermen (there could be more later) issued an alternative budget Tuesday to the mayor, and, with our pragmatic hats on, we liked most of what we read.
Last month, the City Council’s Finance Committee voted down the Johnson administration’s proposed revenue ordinance, the centerpiece of which is a return of the corporate head tax, a monthly per-job levy rightly derided as a disincentive to business hiring and investing in the city. The gang of 26, notably, are made up mostly of aldermen unaligned either with the most conservative council members or the most progressive, who usually are in the mayor’s camp.
We would call it an alternative budget, and no doubt others will, but the blueprint actually leaves much of what Team Johnson has proposed intact. Untouched is Johnson’s plan to boost the nation’s highest tax on cloud computing licensing payments — a major tax touching many Chicago businesses — by 27%. The aldermen’s plan even restores in full Johnson’s proposed tax on Uber and Lyft rides after the mayor’s team reduced its scope to win more support for its original budget plan.
But the justly loathed head tax at any level is gone — which, as we have said several times, is critical to signaling to the private sector that businesses are valued as job creators and substantial contributors to Chicago’s welfare, now and in the future. (Alas, the mayor on Tuesday continued to insist on the head tax despite staunch opposition from what appears to be a majority of the council.)
The aldermanic alternative scraps the mayor’s plan to borrow in order to finance $166 million in back pay owed to Chicago firefighters under a recent labor pact. Likewise, the plan rejects Johnson’s proposal to greatly reduce the advance payment to the city’s nearly insolvent pension plans; instead, the full $260 million contribution would be made.
Those wise provisions are aimed at staving off a future credit downgrade — a distinct possibility if the council were to approve the mayor’s budget. Standard & Poor’s Global Ratings, which downgraded the city earlier this year, cut its outlook on Chicago debt to negative in early November, shortly following Johnson’s budget release.
Of course, all three of these major changes blow holes in Johnson’s budget, which had to plug a $1.2 billion 2026 deficit in the first place. So there has to be a combination of cost cuts and revenue increases to compensate.
Here, Team Compromise has settled on hiking the city’s monthly trash collection fee to $18 per household from $9.50 currently, with exemptions for senior citizens. That surely would be felt by lower-income homeowners, even if the fee still would lag behind what most other cities charge, but that seems a reasonable revenue measure in this moment of fiscal crisis, given the actual cost to the city of providing this service.
A revised sales tax on liquor sold other than at bars and restaurants would raise $24 million. Again, that seems reasonable, and crucially it protects bars and restaurants, which are struggling mightily at present.
As proposed by Ernst & Young in an audit of city government done earlier this year, the aldermen propose that city workers be asked to contribute by agreeing to very modest increases in what they pay for health care. They get some of the most generous health care benefits of any municipal workers in the entire country, so this is an extraordinarily reasonable demand to make of them in a spirit of shared sacrifice. Other cities run by Democratic mayors and lawmakers, as we’ve written before, have demanded far more sacrifice from their unionized workforces in solving their budget problems.
There’s more, of course. This proposal represents the broad outlines of a final agreement; it isn’t close to a finished product.
It’s not what we would do if we were in charge. There would be a far more substantial reorganization of city government, with the elimination of some departments and consolidation of others. Not to mention some careful trimming of clearly bloated management ranks.
But here’s the nature of eleventh-hour compromises. No one in any camp gets everything they want.
Much of Johnson’s budget would remain, most onerously the nosebleed 14% cloud-computing tax that, at $333 million in additional revenue, already puts most of the budget-balancing burden on businesses.
With this new alternative, a budget that was ideological in nature and correspondingly divisive can now at least return to the realm of reasonable negotiation. But that will require willing parties on the other side of the negotiating table, starting with the city’s chief executive.
We say to the mayor that this aldermen-revised budget does not call on him to significantly compromise his principles. On the contrary, it respects them.
Thus we call on the mayor and the rest of the council to leave ideological straitjackets (and the head tax) at the door and work to forge a balanced budget that spreads the sacrifice among all parties with a vested interest in Chicago’s future.
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