Chicago City Council majority tells Mayor Brandon Johnson his 2027 budget plan "is a non-starter"

A majority of the Chicago City Council on Tuesday told Mayor Brandon Johnson that they will not support more than $300 million in new or increased taxes included in his 2027 budget plan, setting up what promises to be another lengthy debate over how to erase an $882 million deficit.

A group of 28 alders sent Johnson a letter saying they will not support his plan to revive the corporate head tax he tried and failed to pass last year, or his proposal for a 33% increase in the city's personal property lease tax.

The mayor's office has estimated those two taxes will bring in approximately $335 million a year.

"We will not vote for a budget that includes a tax on jobs, the increase in the personal property lease transaction tax, or new spending," the letter from the 28 alders who labeled themselves the "Budget Accountability Coalition" told Johnson. "This version of your budget is a non-starter. This budget would hold back growth just when Chicago needs it most."

Johnson needs 26 votes to pass his budget plan, and with 28 alders already opposed, he will need to either make concessions to his opponents on the City Council or change their minds, an unlikely possibility given the same coalition passed their own budget plan for this year over the mayor's objections.

In his budget address last month, Johnson proposed what he called an "equitable employer tax," which is often also called a "head tax," despite a City Council majority warning him ahead of time that any such proposal was dead on arrival.

The mayor is proposing to charge companies with 125 or more full-time employees $25 per worker per month. Companies whose employees work in parts of Chicago officially designated as Socioeconomically Disadvantaged Areas would qualify for so-called "SEED credits" to cover the cost of the tax for each employee in those areas. Johnson's office estimates the tax would bring in $101 million a year.

In addition, the mayor plans to increase personal property lease taxes from 15% to 20%. The tax covers companies and people leasing property, cloud computing services, digital software, and more. Under the mayor's plan, the tax rate for car leases would remain at 15%, while leases for film production equipment would see their tax reduced to 11%. The mayor's office estimates the changes to the personal property lease tax would generate $234 million.

In opposing those two tax plans in the mayor's budget, alders noted the personal property lease tax was already increased from 11% to 15% in the 2026 budget, and was supposed to have been frozen at that rate for two years.

"We gave Chicagoans our word on that rate. If we break it one year later, why should any Chicagoan believe the next commitment this Council makes?" alders wrote.

In response to his critics on the City Council, Johnson sent a letter of his own to the entire City Council, saying his budget team is already working on changes to the SEED credits included in his head tax plan, and changes to his lease tax proposal, without offering specifics.

While Johnson did not commit to dropping either of those tax plans altogether, he did say he is open to alternatives.

"I am appreciative of the specific ideas several members have offered for revenue solutions. My office is carefully evaluating each proposal. I remain open to all concepts and look forward to reviewing more options as additional members have indicated that their teams are in the process of vetting solutions," he wrote.

In addition to their opposition to Johnson's head tax and lease tax proposals, alders also have shot down his decision to use $75 million in proceeds from the city's parking meter deal to help cover pension employee payments in 2027. Instead, alders voted 44-6 to use that $75 million as an extra pension payment this year, blowing another hole in Johnson's 2027 budget plan.

Combined with the taxes most alders oppose, Johnson's budget plan is left with a hole of more than $400 million.

The City Council has until the end of the year to pass a 2027 budget plan. Last year, Johnson's critics on the council passed a budget plan on Dec. 20.

The next two full City Council meetings are scheduled for Dec. 8 and Dec. 9, although it's unclear if a final budget vote will be ready by then.