Mayor Brandon Johnson’s $16.6 billion spending plan for 2026 was dealt a major blow on Monday, as a key City Council committee voted down his plan for roughly $600 million in new taxes.
The Finance Committee’s 25-10 vote against the mayor’s tax package came only after repeated efforts to delay any vote were blocked.
The key sticking point for many critics of Johnson’s budget plan was his push for a $21 per month per employee tax on large businesses, also known as a head tax.
The mayor’s original head tax plan would have applied to all businesses with more than 100 employees, generating an estimated $100 million a year toward violence reduction and youth jobs programs. But in the face of resistance, Johnson revised his plan to apply the tax only to companies with more than 200 employees, generating $82 million in annual revenue.
Monday morning, in a signal the mayor still couldn’t get enough support for his head tax plan, his budget team told alders the latest plan would again apply to all companies with more than 100 employees. Violence prevention and youth jobs programs would get $82 million from that tax, with the remaining $18 million going toward small business grants.
Those changes weren’t enough to win over a majority of alders.
Ald. Brendan Reilly (42nd), one of the mayor’s most outspoken critics, argued that the head tax would only drive more businesses out of Chicago.
Reilly noted that a recent analysis by Cook County Treasurer Maria Pappas’ office determined the median property tax bill for homeowners in Chicago rose 16.7% in the past year, in large part because of a $134 million drop in property taxes collected from commercial properties.
“The bottom line is this head tax is only going to make things worse,” Reilly said. “The shift is being put on the homeowners, because commercial properties are paying less, because they’re valued less, because they’re empty. That’s why.”
Early in the meeting, the panel’s chair, Ald. Pat Dowell (3rd) moved to recess the meeting until next month, in an apparent effort to buy Johnson more time to shore up support for his budget, but the mayor’s critics tabled her motion on a 24-7 vote. After more than an hour of debate, Budget Committee chairman Ald. Jason Ervin (28th) again sought to recess the meeting until December, but his motion failed in an 18-18 tie.
“Can we just get this vote done now?” Ald. Matt O’Shea (19th) said in the midst of Monday’s debate. “This is a joke. They’re calling people out there right now to delay this.”
The mayor’s budget team argued that, without the head tax, the only way to continue funding violence prevention programs and youth jobs would be service cuts, including reductions in the budgets for the Police and Fire departments.
Ervin, who has been one of the mayor’s most vocal allies on his annual budget plans, “Ultimately, this body’s just got to make some decisions. Are we going to reduce expenditures? We say efficiencies, but efficiencies at this point in time amount to service reductions. Are we going to make those service reductions?”
“Pick today whom you will serve, and the question is are we going to serve the residents of the city, or are we going to serve folks downtown? It’s just that simple. Are we going to help Google out, or are we going to help grandma? Are we going to help the stock market or the supermarket?” he said.
The ultimate 25-10 defeat of the mayor’s tax plan sends him back to the drawing board to craft a tax and spending plan that can get the support of 26 alders.
After the meeting, Johnson vowed to veto any budget that includes a property tax hike, increase in garbage collection fees, or reinstatement of a grocery tax.
“We are calling on City Council to work with us to pass a budget that does not include a property tax increase, or additional taxes on garbage or groceries,” Johnson said. “It is incumbent upon all of us to work toward solutions that do not disproportionately burden poor and working people.”
While defending his push for the head tax, Johnson signaled after Monday’s Finance Committee meeting that he would be open to changes to his proposal. But the mayor said critics of his budget need to offer concrete alternatives, not simply reject his proposals.
“There’s still only one clear choice here, for us, and that’s to pass a budget that protects the interests of working people. There are obviously some members of City Council that are more interested in protecting corporations. They have not provided an alternative proposal to my budget, and that’s why we’re going to extend the time so that they have the time to offer up something,” Johnson said. “There are not any magic third options between cuts to core services and layoffs and revenue. Anyone who wants to pretend otherwise is being disingenuous.”
It’s the second year in a row a key provision of the mayor’s budget plan has been voted down. Last year, alders unanimously rejected his push for a $300 million property tax hike.
The City Council has until the end of the year to pass a balanced budget plan for 2026.
In addition to the head tax plan, the mayor’s tax package includes increasing the city’s tax on cloud computing and software licenses to 15%, raising $416 million in new revenue; a first-of-its-kind “social media amusement tax” that would raise an estimated $31 million by taxing social media companies 50 cents per active user over 100,000 in Chicago; and a new “yacht tax” that significantly increases the rate for boat mooring at Chicago’s harbors to bring in an additional $4.1 million a year