Chicago labor unions refuse to back mayor’s ‘mansion tax’

Chicago labor unions refuse to back mayor’s ‘mansion tax’

Fears of what it would do to Chicago’s housing market and economy led a group of Chicago trade unions to refuse to endorse Mayor Brandon Johnson’s plan to increase a city tax on real estate sales.

The Chicago Federation of Labor refused to back Mayor Brandon Johnson’s push for a real estate transfer tax hike over worries about what it would do to development and the city’s economy.

Johnson’s so-called “mansion tax” is on the ballot March 19. It proposes raising the real estate transfer tax on properties sold for $1 million or more, but a single residential property for every nine commercial properties is sold for that amount. That means it is a business and apartment building tax in a city with the nation’s second-highest commercial property taxes.

Crain’s Chicago Business called the vote a “major blow” and a “significant setback” for a mayor who came up from the labor sector.

The federation represents 300 unions and several were concerned about how the tax increase would affect economic development in Chicago. Two of the biggest unions to decline the endorsement depend on new development: the International Union of Operating Engineers and Unite Here, which represents hospitality workers.

The Service Employees International Union Local 1, which represents janitors, maintenance workers, door staff and others, abstained. Their vote would have been enough to move the needle in Johnson’s favor. The Chicago Teachers Union, which put their former employee in the mayor’s office, failed to get the federation to reconsider.

The ballot proposal would increase taxes by over 300% on real estate sales greater than $1 million if passed. While Johnson during his campaign said the tax would generate $400 million for homeless relief, experts have questioned that amount in a lagging commercial real estate market and criticized Johnson’s plan because it lacks specifics about how the money would help the homeless.

Johnson promised the money would go toward fighting homelessness, but has not explained how, except to say it would be “housing first.” That approach has failed – sometimes spectacularly – in other big cities.

Without a disbursement plan, opponents allege the funds could be redirected to other causes at Johnson’s whim. It’s what he did with a COVID funding surplus in December.

Johnson is not inspiring much confidence in voters. A Lincoln Poll in mid-January found 68% of Chicago voters somewhat or strongly disapproved of his handling of housing and homeless issues.

Also, the city has had trouble disbursing homelessness funds without a clear plan in the past. In February 2023, Chicago won a $52 million grant from the federal government, but had only spent 15% of it by August. Many providers moved on to other funding sources while waiting for the city to disburse the cash.

Early voting for the primaries opens Feb. 15 in Chicago. Election day is March 19.

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