In a dramatic move just under the wire, the Chicago City Council has passed a massive budget for 2026, but the financial plan's fate remains uncertain as Mayor Brandon Johnson has not committed to signing it.
A Contentious Budget Process Culminates
The council, on Saturday, held the final votes on ordinances needed to approve a spending plan of roughly $16 billion. This action came less than two weeks before the year-end deadline to avert a local government shutdown. The budget aims to close a staggering $1.2 billion deficit in the city's main operating account, known as the corporate fund.
The process was marked by significant conflict between Mayor Johnson's administration and a bloc of aldermen who opposed key elements of his original proposal. A major point of contention was the so-called "head tax," a monthly fee on larger employers for each worker, which was ultimately excluded from the final revenue ordinance passed by the council.
Revenue Raisers and Mayoral Concerns
Instead of the head tax, the council's package, approved on Friday, authorises higher taxes on cloud computing services and shopping bags, alongside greater debt collection efforts. It also mandates a larger supplemental pension payment than the mayor had initially proposed.
Mayor Johnson, however, has expressed deep reservations. On Friday, he stated he had not decided whether to sign the budget, citing concerns about selling a portion of debt collections to an outside entity and what he views as overly optimistic revenue assumptions. He fears aggressive collection practices against poor residents and potential midyear budget cuts if projected revenues fall short.
Credit Ratings and a Potential Veto
The budget debate also unfolded against the backdrop of Chicago's financial reputation. After shedding its junk rating from Moody's in late 2022, the city's rating trajectory has recently turned negative. Some aldermen argued their budget proposal was crafted to address concerns from credit rating agencies.
"We wanted to pass a budget that better addresses concerns raised by credit rating providers to help avoid a downgrade," said Alderperson Samantha Nugent in a statement. She directly questioned the mayor's next move: "The question now is, will the mayor veto this budget and bring this city to the brink of a shutdown?"
The watchdog group Better Government Association called it "the most fiercely contested budget in years," signalling a shift from the era of nearly uncontested mayoral proposals. With negotiations having lasted for weeks since the finance committee rejected Johnson's initial plan, all eyes are now on the mayor's desk. The city must enact a budget by December 31 to prevent a shutdown.
