Johnson proposes record budget for Chicago with $427 million in higher taxes and fees and $231 million in one-time revenues

The $17.6 billion proposal relies primarily on hikes to close a projected $882.4 million Corporate Fund deficit.

Mayor Brandon Johnson’s 2027 budget proposal calls for hikes on at least six taxes and fees and relies on one-time revenue sources.

Johnson released his plan Wednesday to close the projected $882.4 million deficit in the Corporate Fund, where most of the city’s spending comes from. The proposed tax and fee hikes would generate an estimated $427 million, with an additional $231 million from one-time revenue sources and more than $61 million in increased revenue projections.

The mayor also called for $480 million in borrowing to cover anticipated police misconduct settlements.

The proposed budget increases corporate fund spending by $288 million over 2026 and total spending across all local funds by $665 million. Here’s what’s in the plan:

Higher taxes and fees: $427 million

$235 million from higher cloud taxes

Johnson again proposes increasing the city’s personal property lease transaction tax, also known as the “cloud tax,” from 15% to 20%. The increase is expected to generate an additional $235 million in revenue for the city in 2027, according to the administration. The cloud tax was increased in last years’ budget, rising from 11% to 15%.

$114 million from a corporate head tax

The mayor also is trying again wants to tax corporations who employee people in Chicago. This time he proposes a head tax of $25 per month per employee — equal to $300 per employee per year —for companies with more than 125 full-time employees.

Employers could offset this tax if their employees are in “historically disinvested neighborhoods,” using a new tax credit the city would create to pair with the head tax.  The city estimates the so-called “Equitable Employer Tax” would generate $114 million in annual revenue. A majority of aldermen said last month that they would not support a head tax for the 2027 budget.

$37 million from higher taxes on sports betting

Another proposal would nearly double the city’s sports betting tax rate, raising it from 10.25% to 20%. The increase would yield an additional $37 million in revenue, the city says. The tax was expanded in the 2026 budget to include online sports betting from sites like DraftKings and FanDuel.

$18 million from ticketing vehicles

The mayor wants to expand the city’s Smart Streets program, which automatically tickets vehicles illegally parked in bike and bus lanes. The expansion is projected to generate $12.8 million in additional revenue for the city, according to City Hall. Meanwhile, Johnson proposes a vehicle debt amnesty program for parking, red-light, speeding and compliance tickets. Officials expect the program could generate $6 million in additional revenue.

$14 million from higher liquor taxes

The 2027 proposal includes raising the city’s tax on liquor for off-site consumption from 2.38% to 3%. The increase is expected to generate an additional $13.8 million in annual revenue, according to the administration.

$9 million from a new tax on packages

The administration wants to expand the city’s checkout bag tax to more forms of packaging. The 15-cents-per- package tax would apply to all forms of packaging, with the exception of takeout food and medicines, whether shipped or delivered. The administration expects the expanded tax to generate $9 million in annual revenue.

One-time revenue sources: $231 million

$118 million from TIF surpluses

Johnson again plans to declare a large surplus from the city’s tax increment financing districts. He’s proposed declaring a surplus of $522 million across the city’s TIF funds, which would net the city $118 million in revenue. A large portion of the surplus — more than $286 million — would go to Chicago Public Schools, while the remainder would be distributed to other local governments.

Chicago’s budget has become increasingly reliant on large TIF surpluses in recent years. Johnson’s budgets have included the four largest TIF surpluses on record.

$75 million from the sale of Chicago’s parking meters

The lease on Chicago’s parking meters was recently sold to private investment firm Stonepeak. The City Council negotiated a $75 million up-front payment as part of that deal, which will be available for the 2027 budget. While those funds are welcome, using the one-time payment to prop up increased spending in the city’s budget is unsustainable.

It is also worth highlighting that short-term decision-making like this is why Chicago no longer owns parking meter revenue in the first place.  Chicago sold the rights to the city’s parking meter revenue in 2008 for a one-time payment of $1.15 billion. From 2008 to 2025 the parking meters generated $2.2 billion in revenue, with an additional 57 years remaining on the lease.

$38 million from Catalyst Fund revenue

The mayor also proposes changes to the Chicago Catalyst Fund. While the exact details remain unclear, comments from his budget address suggest that $20 million from the fund would be converted to a new program called the BUILD (“Building up Local Independent Developers” ) Fund. Meanwhile, $37.7 million in additional revenues from the fund will become available to the city’s operating budget.

Improved revenue projections: $61 million

The administration projects $61.4 million more in revenue for the 2027 budget than in the forecast released in September. Improved revenue projections have been a consistent theme in Johnson’s budget proposals; revenue projections were increased by more than $20 million in the 2026 proposal, $215 million in the 2025 proposal and $186 million in the 2024 proposal compared to the prior months’ projections.

New bond proposal: $480 million

Johnson called for new bond issuances during his budget address in anticipation of settlements related to police misconduct. While the exact terms of this proposal are not available, the administration says the bonds could save money for the city in the long-term compared to prolonged litigation.

The city issued bonds last year to cover rising Chicago Fire Department expenses and similar settlements, which were later cited as contributing factors for the a  credit rating downgrade by Fitch. Credit downgrades raise the cost of borrowing for the city and taxpayers and could offset any savings.

Spending increases

Despite facing a deficit of more than $882 million in the city’s corporate fund, Johnson’s 2027 budget proposal still would increase corporate fund expenditures by $288 million. The largest contributor to spending growth in the proposal is a $336.5 million increase in the “Specific Items and Contingencies” category, which includes pension contributions, settlements and judgments and non-personnel programmatic expenses, among other items.

There is also a smaller $10.1 million increase in commodity spending on items like office supplies, small tools and equipment, repair parts for city vehicles and the cost of utilities and motor fuels. The budget for travel and other equipment would see minor increases. The mayor proposes minor declines in spending on personnel and contractual services.

Historically, Chicago’s spending growth has been driven by rising pensions and personnel costs despite declining employee headcounts. Total spending has increased by more than $4 billion since 2019, with over $3 billion of that increase attributable to growing pensions and personnel costs. Debt service also continues to be a major siphon on city resources, taking 15% of the budget, or nearly $2 billion, in 2026 alone.

The 2027 budget proposal from Johnson does nothing to address these cost drivers. Instead, the mayor continues to rely on new tax and fee hikes, budget gimmicks and borrowing to prop up spending that has grown out of line with recurring revenues. Until city leaders address Chicago’s structural budget issues, the city will continue to face the chronic budget shortfalls, the threat of future tax hikes and potential credit rating downgrades.