Mayor Brandon Johnson unveiled his first budget on Wednesday, a $16.6 billion proposal that he says begins to deliver on his progressive promises while keeping property taxes steady and addressing the burgeoning migrant crisis.
Here’s a look at the budget by the numbers.
Some plunging revenues outlined in Johnson’s forecast, released this time last month, turned out not as grim as Johnson said they would be. Chief among them are tourism-based taxes on hotels, restaurants, ride-shares and cabs, and ticket sales, Budget Director Annette Guzman said. The city’s year-end revenue estimates are almost $110 million higher than the 2023 budget.
In all, Johnson’s budget office said revenues are about $187 million higher than they projected in September. Incoming economic data “gives us a lot of confidence in those particular key taxes,” Guzman said. “There’s a lot of stuff that’s going to be happening next year, we have a lot of large events coming.”
Hotel taxes are projected to be $26.6 million higher than 2023 budgeted amounts. Transportation taxes are expected to be $35.2 million higher than 2023, and recreation taxes $25.9 million higher.
[ Mayor Brandon Johnson offers $16.6 billion budget without raising property taxes, cautions progressive agenda ‘will take time’ ]
State individual and corporate income tax receipts are also “robust,” according to the city’s budget overview. The city is expecting income tax receipts from the state to be 14% higher in 2024 compared to 2023, bringing in an estimated $430 million. Personal property replacement taxes — a corporate tax — are expected to be 66% higher, bringing in a projected $442 million in 2024, compared to $266 million in 2023.
Ralph Martire, executive director of the Center for Tax and Budget Accountability, said the jump is good news but also said the corporate profits that have soared amid inflation will likely fall. The Illinois Department of Revenue predicts the revenue source will flatten out in the next year, then begin to decline significantly, Martire said.
”So you’ve got a nice little one-time revenue boost, but it’s not going to be something that continues into the future,” Martire said. “There’s still going to be some very significant structural flaws in the city’s primary corporate fund.”
Johnson stuck to a campaign promise to reconstitute the mothballed Department of Environment. It will cost $1.8 million and have 14 employees. That’s much smaller than the $3.5 million budget that funded the environment department in 2011 when it was closed by Mayor Rahm Emanuel.
Johnson is also splitting up the city’s Department of Assets and Information to also recreate two old departments that merged during Mayor Lori Lightfoot’s tenure: the Department of Fleet and Facility Management and the Department of Technology and Innovation will both be back under Johnson’s plan. The technology department has a $79.8 million budget, and 2FM’s is $530.8 million.
Johnson’s proposal would boost the city’s head count by about 1% compared to last year, from 36,418 to 36,729. That includes new employees “to aid in the implementation of the new arrivals mission, mental health expansion, and infrastructure service delivery,” according to briefing materials.
Head count will not rise for the city’s largest workforce, the Chicago Police Department, though spending will rise by $91 million to nearly $2 billion. The department’s budget has grown steadily from $1.45 billion in 2015.
CPD’s budgeted head count will remain at just over 14,100, but positions will shift internally, administration officials told reporters. Overall rank-and-file head count will slightly dip.
Guzman said the budget adds 398 civilian positions “to aid and support the work of our police force” and free up officers to work. It also creates “440 promotional opportunities,” including 100 detective positions, boosts the number of field training officers and includes additional spending on training and cars for the CPD’s Detective Bureau.
Though Johnson’s speech noted he had promoted 70 detectives since taking office, attrition remains. According to data from the city Inspector General’s office, the overall detective ranks have shrunk between June — Johnson’s first full month in office — and October, from 1,168 to 1,135 employees. According to city data, the department had about 1,750 vacancies compared to budgeted amounts.
“We will be intentional in our community safety strategy, deploying not just police officers but the full force of government to our communities because we know true safety requires this approach,” Johnson said.
The annual property tax levy is one of the most closely watched items each year. Johnson pledged on the campaign trail, however, to hold the line on such increases. Still, the overall property tax levy is expected to climb by $39.1 million, to $1.77 billion, in 2024, according to Johnson’s proposal. The mayor noted in his speech he did not propose raising “base property taxes,” meaning the levy likely climbed to capture new properties and expiring tax increment financing districts without boosting the overall rate.
[ Mayor Brandon Johnson details $538 million gap in his first budget ]
During Emanuel’s tenure, City Council members authorized massive property tax hikes to begin tackling rowing deficits in the city’s four main pension funds. During Lightfoot’s administration, aldermen raised the levy more gradually and began tying the annual increase to the rate of inflation.
That 2021 decision to link annual increases to the Consumer Price Index won plaudits from ratings agencies, and, as Lightfoot argued, would give residents certainty about their bills. But Johnson opted out this year, contributing to the estimated $538 million deficit. Pension payments are expected to level out at roughly $2.7 billion in 2024.
While he opted out of an inflation-based increase, Johnson did choose to continue a different Lightfoot pension policy. On her way out the door, she signed an executive order requiring the city to establish a “pension advance fund” using budget surpluses to help the pension funds tread water, telling Johnson not to “screw it up.”
In 2023, $242 million of the city’s total $2.6 billion pension contributions were advance payments. Johnson plans to make a $307 million payment on top of what is required by law, boosting the estimated payments to the pensions to about $2.7 billion in 2024.
Johnson said he will continue the policy until 2026, when the city’s casino is fully operational. Gaming revenues are expected to create about $200 million annually that will be dedicated to pensions.
Also weighing heavily on the city’s ledger: the cost of paying down old debts. Those expenses are slated to increase roughly 5%, to $2.15 billion, above the 2023 total.
Federal pandemic stimulus to the city through the American Rescue Plan Act must be allocated by 2024 and spent by 2026. Those funds have largely been spent, replacing revenues lost during the pandemic. That means grant funding at some city departments has plummeted. The $1.9 billion funds given to the city of Chicago had been almost entirely allocated during Lightfoot’s administration.
Of that sum, Johnson’s administration says roughly $461 million is set aside for specific departments, but unspent: $133 million is left over at the city’s Department of Public Health, $157 million at the Department of Family and Support Services, and $61 million at the city’s Department of Planning and Development.
Lightfoot’s Recovery Plan Bonds, which also leveraged federal dollars, are also allocated, but not yet spent.
Johnson’s budget continues a time-honored tradition among mayors facing steep budget holes: using surplus money from the city’s TIF districts to plug the deficit.
The practice is frowned upon by budget watchdogs such as the Civic Federation. The group has warned it is an unsustainable practice that “exacerbates the city’s ongoing structural deficit and leaves the city particularly vulnerable in the event of unexpected costs.”
But the growing combined balance of the city’s TIFs has made it difficult to resist. For 2022, for example, the balance for all of Chicago’s TIF districts was $2.57 billion. When TIFs expire or are deemed to have surpluses, funds must be divided proportionally to local taxing bodies. When the city declares a surplus, Chicago Public Schools receive roughly 55% of the cut, which can also help the district prop up its ailing budget.
This year, Johnson plans to declare $434 million in TIF funds as surplus, $39 million more than last year. It’s a record amount that would net about $100 million for the city and $226 million for CPS.
During his campaign, Johnson said his administration would “regularize the transfer of surpluses” to the city’s corporate fund. The Civic Federation noted the practice went against TIF’s purpose: to spur development in certain areas of the city.
Chicago Tribune’s Jake Sheridan contributed.
aquig@chicagotribune.com
