* 8/21/25 - Crains - Johnson to unveil budget plan mid-October, starting months of tension over $1B gap.............................
Buzz Sawyer
Johnson to unveil budget plan mid-October, starting months of tension over $1B gap
Mayor Brandon Johnson and the City Council will likely be in negotiations over the 2026 budget into early December in what’s expected to be a fraught process without easy options to close a shortfall hovering around $1 billion.
Johnson is tentatively scheduled to deliver his 2026 proposal on Oct. 16, according to a schedule provided to some members of the City Council obtained by Crain’s.
The address will land two weeks earlier than last year, when Johnson delayed the speech to the frustration of some on the council who wanted more time to amend and craft a final spending plan.
Annual budget hearings where the City Council gets a chance to grill every city department head will be held through the week of Nov. 10 on a three-day-a-week schedule, breaking the traditional compacted schedule featuring marathon meetings on consecutive days.
If everything goes smoothly, and it’s expected to be anything but, committee votes and a full City Council vote would come in early December ahead of a deadline to approve a budget plan by the end of the year.
Budget Committee Chair Ald. Jason Ervin, 28th, said the change to the departmental hearing schedule is meant to address complaints that last year’s frenzied process had not allowed council members to spend more time in their ward offices dealing with the bread-and-butter issues of their residents.
“You literally can't do any other business while this is happening,” he said. "We've still got to get the work done, but just spread it out a little more and give members a little more opportunity so people can be focused on it while they're there, and don't feel like you're neglecting your ward because you're down here for two weeks.”
Ervin chalked up some of the procedural chaos of last year, with special meetings and potential compromises falling apart the day of City Council votes, to the influx of new members without significant experience.
"We're better equipped to have conversations now, because those that are new are no longer brand new,” he said. “There’s a learning curve. . . .I think that people know and understand each other's pain points and positions, and I think everybody can learn from that. And hopefully have a smooth budget process.”
While the schedule could allow for everything to be wrapped by Thanksgiving, it's unlikely. There are tentative holds for City Council meetings into mid-December.
"None of these options appear to be rosy," Ervin said.
Proposals and projections still to come
A budget task force led by Loop Capital’s Jim Reynolds and made up of business, labor and civic leaders has been meeting for months and will deliver preliminary recommendations for the 2026 budget to the city by Aug. 31. The task force has been split into two working groups to look into new revenue options and efficiency proposals, and all members were asked to sign nondisclosure agreements.
City officials will also release an updated annual budget forecast by the end of August that will provide a new 2026 budget shortfall figure as well as projections for 2027 and 2028 based on various macroeconomic conditions.
Last year, the city projected a $1.12 billion 2026 shortfall, and the city’s finance team has said throughout the year they don’t expect a dramatic departure from that figure.
By the time Johnson delivers his proposal for the City Council to dissect, council members should have more information than is typical because there will also be departmental briefings in September. Those hearings are required under a measure approved as part of last year’s budget to provide a midyear look at the city’s 2025 revenue intake and expenditures, but will likely serve as a preview of the fault lines in the 2026 budget negotiations.
Johnson is exploring several tax increases and hikes to existing levies in a bid to bring in enough revenue to close the shortfall without significantly cutting city services and personnel, but will face resistance from the affected industries and their allies on the City Council.
A moonshot bid to introduce a tax on corporate payroll expenses to bring in over $1 billion in new revenue was deemed not legal under the city’s existing taxing authority, sources previously told Crain’s and which the city’s chief financial officer Jill Jaworski appeared to confirm at a City Club event.
In July, Johnson ruled out seeking a property tax hike days after Jaworski said an increase would “likely” be in the budget. The City Council last year rejected Johnson’s initial $300 million property tax hike at the center of his proposal to close a $982 million shortfall and would only approve a final deal when the tax increase was completely stripped from the revenue package.
Johnson is still considering a separate corporate head tax that hits larger businesses with a per-employee fee if they qualify as operating in Chicago. The city had a head tax from 1973 until 2014, when former Mayor Rahm Emanuel eliminated it, arguing the tax was a disincentive to hiring.
But the head tax, unless drastically increased from the previous $4-per-employee rate, brings in much less revenue than the broader payroll expense tax.
Before it was phased out, the head tax affected 2,700 companies and brought in $35 million in revenue in 2009 and 2010 combined, according to a 2023 report from the Civic Federation. At the time, the tax was limited to companies with at least 50 employees who performed at least 50% of their work in Chicago and earned at least $4,300 per quarter.
Justin Laurence is a reporter for Crain’s Chicago Business covering politics and policy from City Hall to Springfield. Prior to joining Crain's in 2022 he covered city politics, development and cannabis as a freelance reporter.