Alternative budget plan challenges Mayor Johnson

Aldermen attempting to pass their own 2026 Chicago budget over Mayor Brandon Johnson’s objections revealed Tuesday morning that they will try to balance their plan with increases in liquor taxes, plastic bag fees and Uber charges, along with millions from ads on downtown bridge houses and legalized video gambling.

The renegade group claiming a City Council majority released and quickly advanced its plan to close a $42 million 2026 budget gap created by them removing a garbage fee increase from their package and restoring funding for youth summer jobs.

The opposition spending plan — a stunning effort by aldermen to outmuscle Johnson and end Chicago’s tense budget negotiations — advanced in the City Council’s Finance Committee in a 22-13 vote.

Supporters defend approach as deadline looms

“There’s not a budget that’s on the table right now that everybody likes every aspect of,” Ald. Nicole Lee, 11th, a leader of the alternative group, said as the meeting started. “But our job is to make sure that the city government continues to run, and do it in a responsible way, and we believe that we have that, that we’re meeting our obligations, and that we’re leaving Chicago stronger for it.”

The spending plan could pass this week, a timeline Johnson argued Monday night leaves his team with too little opportunity to vet it as the city faces an end-of-year deadline to avert a government shutdown. Johnson could veto the proposal if it passes, a move that would place immense pressure on him and aldermen to put together and pass a budget in mere days.

The Tuesday vote shows the alternate plan currently has enough support to pass, but likely not enough to weather a veto. The mayor’s City Council opponents tried Tuesday to ward off the veto possibility by noting their plan includes none of the items Johnson has already promised to block.

“No garbage, no grocery, and no property tax hike,” Ald. Scott Waguespack, 32nd, one of the leaders of the renegades, said Tuesday as the committee debate heated up.

Johnson allies question revenue estimates

While the budget’s backers adamantly defend the projections they used to declare it balanced, Johnson has argued it relies on shoddy estimates and will leave the city with a dangerously unreliable ledger.

The group withheld details about their plan from Johnson during a tense, short Monday evening meeting.

“They are prepared to move forward with a proposal that I have not had a chance to review, nor my team. That is not how negotiations work,” Johnson said afterward.

As those specifics became public Tuesday, they came under fire again from Johnson allies. Ald. Byron Sigcho-Lopez, 25th, called the plan “super inflated,” while Ald. Rossana Rodriguez-Sanchez, 33rd, said it was another example of aldermen trying to “govern on vibes.”

“A lot of people just bring policies that they haven’t researched and they can’t talk about the impact,” Rodriguez-Sanchez said after asking for data and studies backing up various parts of the alternative plans.

Members of the anti-Johnson group repeatedly said during the contentious meeting that many of their revenue estimates are “conservative,” and largely based on two Johnson-commissioned sources: the Ernst & Young report suggesting medium-term savings and efficiencies, and the mayor’s budget task force report.

Tax hikes and new revenue streams

The new plan relies upon several tax hikes: a 5 cents-per-bag — or 50% — increase in the city’s plastic bag tax, projected to bring in $8.7 million; liquor tax increases estimated to raise $6 million; and an expansion of the area where ride-share surcharges apply.

The proposal also relies upon several untested plans to earn the city money without taxes. It estimates the city will earn $29.3 million by selling new ads on bridge houses, light poles and city vehicles. And it pegs a new augmented-reality advertising program as a $6 million boon, an amount lower than previous estimates from the group.

The most eye-catching new cash cow: the legalization of video gambling terminals across the city. That controversial plan, long-debated in the City Council, would clear the way for gambling at venues across the city to bring in $6.8 million in licensing fees next year, according to the plan.

Ratings concerns and pension funding

The alternate budget aldermen have said their goal was to create a proposal more structurally balanced than the mayor’s, a nod to fears that the city would face a costly downgrade from ratings agencies. While the alternative contains the full planned $260 million advance pension payment — which ratings agencies consider a “credit positive” — it does not eliminate other borrowing that otherwise kicks the can slightly down the road, a practice the agencies tend to punish.

Under the plan, $20 million of that payment would come from the city’s reserves, which are expected to be refilled when Chicago Public Schools pays the city back for a nonteacher pension payment.

The alternate proposal still includes issuing general obligation debt for what Johnson administration officials described as “extraordinary” legal settlement costs and back pay owed to Chicago firefighters. Johnson’s proposal called for it to be paid back within the next five years.

It also matches the mayor’s plan with a record $1 billion surplus from tax increment financing districts, a move credit agencies will likely view negatively as a one-time revenue raiser.

One-time fixes and debt collection plans

The proposal also counts as $46 million in various “efficiencies” recommended by the consulting firm Ernst & Young in a report Johnson requested earlier this year and anticipates an $89.6 million spike from selling debt owed to the city. Johnson’s comptroller criticized that proposal as a “one shot” that ratings agencies would frown upon.

But perhaps the most critical piece of the plan is what it does not include: a head tax on businesses.

Johnson has declared a head tax, most recently billed as a monthly $33-per-employee payment from companies with over 500 Chicago employees, his top priority, describing it as an effort to tax the rich — and not working-class Chicagoans — as wealthy companies secure tax cuts from President Donald Trump.

Many aldermen have forcefully fought the measure, describing it as a job killer that will harm the city’s economic growth. The measure has been repeatedly opposed by City Council majorities in signed declarations and even a Finance Committee vote.

The alternate report does maintain Johnson’s proposal to raise the “personal property lease tax,” which has boomed thanks to the use of cloud-based software, to 15%. That rate would be capped until the end of 2027, Lee said. In all, the aldermen’s plan counts on $92.6 million from fines, forfeitures and penalties, including from cutting down on existing debt owed to the city.

Ald. Scott Waguespack, 32nd, said $1 billion of the estimated $8 billion in debt is “saleable,” and about 10% could be collected through “modernized collection efforts.”

Johnson administration sources have said the city was already exploring opportunities to offload it to private collectors, but on Tuesday, Comptroller Mike Belsky noted that such an effort has “never been done by any city,” adding that he would “not rely” on receiving $89 million next year. That kind of infusion would be a “one shot” anyway and is not a structural fix to the city’s ongoing deficit.

Enforcement, fees and service changes

More enforcement of the city’s environmental regulations requiring certain buildings to report energy usage could net $3 million, the anti-Johnson aldermen estimated, if enforcement starts midway through next year. The city can also collect a number of smaller “cost recovery” fees recommended in the E&Y report, like fire alarm inspection fees, false alarm burglar fees and increasing fees charged to film productions to utilize squad cars.

The proposal also suggests reducing around-the-clock staffing at the city’s 311 center, and introducing chat bots for overnight calls.

Advertising on light poles, the budget working group estimated, could net $4.3 million, while selling naming rights for bridges would bring in $10 million. Allowing city property to be licensed for augmented-reality games or apps like “Pokemon Go” would net $3 million, the group estimates.

Library funding and property tax vote

Aldermen also voted 23-6 to advance a plan to raise property taxes by around $9 million to avert the layoffs of nearly 90 library workers and dozens of library security guards, a move backed by aldermen on both sides of the broader budget debate.