What Mayor Brandon Johnson’s 2024 budget means for Chicagoans
Chicago Mayor Brandon Johnson presented his first budget to other city leaders on Oct. 11. While he kept his promise not to raise property taxes, there are other fiscal challenges that will hit taxpayers hard in the future and need to be addressed now.
Chicago Mayor Brandon Johnson’s first budget is a muted win for Chicagoans, mainly because he kept his campaign promise to not raise property taxes.
The budget is balanced – sort of, and for now. Future deficits for 2025 and 2026 are higher than previously projected. And Johnson was unable to fulfill many of his progressive campaign pledges because of fiscal realities.
Overall, Chicago’s fiscal situation is a mess Johnson inherited that will eventually harm all Chicagoans, especially the poor and disadvantaged. This 2024 budget is an opportunity for him to start addressing it.
Here are the major issues in Johnson’s budget.
The budget is balanced (for now): Johnson closed a projected $538 million hole without increasing property taxes.
Spending did, however, increase faster than inflation. The net appropriations of local funds – the spending the city controls and finances – increased by $480 million, or 4.1%, which is slightly above the 3.7% inflation rate just announced for the 12 months ending September 2023.
If we dig in, we see the way Johnson balanced the budget is problematic.
He decided to take $434 million from the city’s Tax Increment Financing Fund – the most ever, and $39 million more than last year. This only yields the city an extra $100 million in tax revenue because the $434 million is divided up among all the overlapping districts, including schools, parks, Cook County, etc.
And big budget issues loom. The city is projecting a budget deficit of $686 million to $1.5 billion for next year. Johnson’s progressive agenda will have costs associated with it, too – if it passes.
Taxes don’t go up: Johnson kept his campaign promise and didn’t raise property taxes. Whether this will persist is unclear, because he’s pushing a “mansion tax” that would, among other negative consequences, serve as a significant commercial property tax increase. Chicago already has the second-highest commercial property taxes of any U.S. city.
Police funding is up, without plans to address public safety problems: Police funding is up 4.7% to $1.998 billion. The city’s police headcount is slated to stay the same. Given how rampant crime is, that’s hard to justify. In 2022, 1 in every 1,000 residents in Chicago was a victim of gun violence. The four years with the highest numbers of homicides in Chicago since 2000 took place between 2016 and 2022. Serious crime in Chicago increased 41% from 2021 to 2022, and by 19% from 2018 to 2022.
Even more troubling, Johnson did not present the plan the city needs to fill the city’s 1000-plus officer vacancies.
Pension problem gets a bandage: The good news is Johnson added $307 million to the city’s pension fund, a tiny down payment on the $34 billion in pension debt for which the city is responsible.
The concerning news is pensions are also projected to cost the city $335 million more than expected in 2024, with the bill coming in at $2.8 billion.
And the even worse news is Johnson offered no long-term plans for addressing the pension problems he inherited.
Because pension service and debt make up more than 40% of the city’s budget, they’re slowly and firmly squeezing every other budget priority – including Johnson’s progressive promises.
Debt crisis persists: Debt payments gobble up 17% of the city’s budget, or $2.1 billion.
Debt payments consume more of Chicago’s budget than police funding.
The debt burden prevents the city from reducing the oppressive taxes driving families and businesses out of the city and state.
Immigration plans unclear: Johnson reaffirmed his support for migrants, saying, “Now how we support those who seek refuge in our country and in our city, it speaks to our values.” He included $150 million for immigrant costs.
Where that money will come from and whether it is close to enough remains unclear.
Johnson said recently he expects the city to spend over $300 million in 2023 on migrant care. That number will continue to grow as more migrants come to Chicago. It’s important to know how the city will finance over $150 million Johnson claims is enough for immigrants in 2024.
Given more Chicagoans support ending the city’s “sanctuary” status than keeping it, residents at a minimum deserve honest accounting about how Johnson plans to pay for this support, and what tradeoffs he proposes making.
Johnson unable to keep progressive campaign promises: The upshot of these budget realities is Johnson was unable to deliver on his major tax policies. They include:
- “Making the big airlines pay for polluting the air” in Chicago neighborhoods – estimated revenue of $98 million.
- New “user fees on high-end commercial districts frequented by the wealthy, suburbanites, tourists and business travelers” – estimated revenue $100 million.
- Reinstating the $4-a-month-per-employee “head tax” on “large companies” that perform at least half their work in Chicago – estimated revenue $20 million
- Taxing financial transactions at a rate of $1 or $2 for every “securities trading contract” – estimated revenue $100 million.
- Increasing Chicago’s already near nation-leading hotel tax – estimated revenue $30 million.
Because his political capital is highest now, chances of them happening in subsequent years are probably lower.
The best way for Johnson to care for the poor and disadvantaged is through the same proven pathway that made Chicago great to begin with: grow the economy. That means wrapping your arms around the people who create jobs and commerce that yield taxes rather than treating them like an enemy who deserves to be plundered. Businesses have, can and will move away from harmful government burdens.