Crusader Staff Report
The Chicago City Council and Mayor Brandon Johnson remain locked in a high-stakes standoff over the city’s 2026 fiscal year budget, a deadlock that threatens to trigger an unprecedented government shutdown if a spending plan is not approved by the Dec. 31 deadline.
At the heart of the impasse are two competing philosophies on how to close a projected $1.15 billion deficit without raising the base property tax levy. The mayor’s “Protecting Chicago Budget” relies heavily on new taxes on large corporations to fund social programs, while a coalition of opposing aldermen has introduced a “Substitute Revenue Ordinance” that seeks to legalize video gaming and increase taxes on specific consumer goods and services to avoid placing a higher burden on the city’s business sector.
Mayor Johnson’s $16.6 billion proposal is anchored by a controversial “Community Safety Surcharge,” commonly referred to as a reinstatement of the corporate head tax. The administration’s plan would levy a tax on the city’s largest businesses—those with more than 100 employees—to generate approximately $100 million annually. Johnson argues this “progressive revenue” is essential to fund $100 million in dedicated investments for community safety, youth employment, and violence prevention without tapping into the pockets of working-class residents.
The mayor’s proposal also includes a 10.25% tax on online sports wagering, a tax on hemp-derived products, and an extension of the amusement tax to social media companies. Additionally, Johnson plans to declare a record $1.01 billion surplus from Tax Increment Financing (TIF) districts, which would return roughly $232.6 million to the corporate fund and aid other taxing bodies like Chicago Public Schools. His budget explicitly prioritizes maintaining social services, including $5.1 million for rapid rehousing programs and the permanent funding of the Crisis Assistance Response and Engagement (CARE) mental health program.
In stark contrast, a coalition of roughly 26 aldermen—dubbed the “Alternative FY26 Budget Aldermanic Coalition”—has rejected the head tax, warning it would stifle economic growth and drive businesses out of the city. Their alternative budget, detailed in the Substitute Revenue Ordinance, proposes a mix of “sin taxes,” fee hikes, and structural changes to generate revenue.
A centerpiece of the aldermanic proposal is the legalization and taxation of video gaming terminals, a practice currently banned in Chicago. The ordinance establishes a licensing framework for gaming to generate new city revenue. The proposal also targets consumption-based taxes, including a new 3% tax on off-premise alcohol sales, an increase in the checkout bag tax from 7 cents to 15 cents, and a hike in the Personal Property Lease Tax—which applies to cloud computing and leased equipment—from 11% to 15%.
The opposing budget also leans on increased regulatory fees. It proposes raising the cost of vehicle stickers, doubling inspection fees for food establishments, and increasing charges for public way obstructions. While the aldermanic coalition initially proposed nearly doubling the monthly garbage collection fee from $9.50 to roughly $18, leaders of the group signaled earlier this week they would drop that specific provision following fierce pushback from the administration and residents, though the search for replacement revenue continues.
Political fault lines have deepened as the deadline approaches. Mayor Johnson retains the support of the City Council’s Progressive Reform Caucus, the Chicago Teachers Union, and grassroots organizations like the People’s Unity Platform, who argue that corporations must pay their fair share to address systemic inequities. They contend that the aldermanic proposal relies too heavily on regressive measures that disproportionately affect lower-income residents.
The opposition coalition is led by moderate and conservative-leaning council members, including Ald. Gil Villegas (36th), Ald. Scott Waguespack (32nd), and Ald. Bill Conway (34th). This group is aligned with the concerns of the business community, including the Chicagoland Chamber of Commerce, which has aggressively lobbied against the reinstatement of the head tax. These aldermen argue their plan protects the city’s fragile economic recovery while still closing the budget gap through what they term “efficiencies” and more reliable revenue streams.
The consequences of failing to reach an agreement are severe. If the City Council does not pass a balanced budget by midnight on Dec. 31, Chicago will enter its first-ever government shutdown. Such an event would result in the immediate furlough of more than 30,000 city employees, halting all non-essential city services. While essential functions like police and fire protection would likely continue, administrative operations, permitting, trash collection, and other municipal services would grind to a halt, plunging the city into uncharted administrative chaos at the start of the new year.
As negotiations continue, the two sides remain divided not just by dollars and cents, but by a fundamental disagreement over who should foot the bill for Chicago’s future. With the clock ticking, the risk of a shutdown looms larger, placing immense pressure on both the mayor and the City Council to forge a compromise before the new year begins.