Chicago Mayor's 2027 Budget Relies on New Taxes to Offset $882M Deficit

Key points

• The proposed budget includes $664 million in new revenue and $131.5 million in new investments, alongside $120 million in cuts.
• New taxes include a 15-cent fee on delivered packages and a corporate head tax charging businesses with 125+ employees $25 per worker monthly.
• The plan increases funding for mental health crisis response, libraries, and youth employment, while expanding street sanitation and tree trimming crews.
• The city seeks $480 million in borrowing authority to cover police misconduct settlements, including $260 million for cases involving former detective Reynaldo Guevara.
• Critics note that city spending has risen by $4.1 billion since 2019, driven primarily by pension contributions and personnel costs, rather than a lack of revenue.

Background

This proposal follows a contentious 2026 budget cycle where Johnson previously vetoed a council ordinance requiring a three-fifths vote for borrowing. The current plan mirrors earlier attempts to balance the budget without raising property taxes, a strategy that faced significant opposition from a bloc of aldermen in the previous year.

How outlets are covering it

Block Club Chicago frames the budget as a necessary expansion of services, with Johnson arguing that cuts alone cannot achieve fiscal fairness. In contrast, Illinois Policy emphasizes that Chicago’s spending has surged by 46.5% since 2019, primarily due to pension obligations and personnel costs. Illinois Policy argues that the city’s high property taxes already burden residents, and that the deficit stems from uncontrolled spending rather than insufficient revenue. While Block Club highlights the new package tax and corporate head tax as revenue solutions, Illinois Policy points to the structural issue of unfunded pension liabilities exceeding $36 billion.

Why it matters

The budget proposal highlights the tension between expanding city services and managing a growing deficit. The reliance on new taxes and borrowing for police settlements could impact local businesses and taxpayers, while the underlying pension crisis remains a long-term financial challenge for the city.

What to watch

City Council will debate the proposed budget, with a majority of aldermen previously opposing the corporate head tax. The outcome of the borrowing measure and tax proposals will determine whether the city can fund its expanded services or must implement deeper cuts.