Mayor Brandon Johnson’s first big fiscal test: How to translate campaign promises into dollars and cents

CHICAGO — Brandon Johnson strode into a conference room this month at Malcolm X College, where scores of mostly West Siders had gathered to hear how Chicago’s newly minted mayor will align his unapologetic progressivism with the dollars-and-cents realities of the city’s $16.4 billion budget.

The crowd of at least 100 at the community budget roundtable listened raptly as the mayor dared them to imagine: “How about a budget that creates more than enough for revenue?” It was a nod to his stirring orations during the campaign where he often promised his dinner table will be “big enough” for all Chicagoans.

But during another roundtable this past week, Johnson’s budget director, Annette Guzman, spoke in more cautious terms.

“Unfortunately, it’s sort of like a zero-sum game,” Guzman said. “OK, there’s only so much resources that we have. So we have to make sure that we’re allocating it amongst many, many competing interests.”

Their divergent messaging underscored a tension between idealistic and pragmatic in the nascent administration as it prepares its 2024 budget. At stake is whether the bold candidate from the campaign trail can deliver on his pledge of transformative investments without breaking signature vows on property taxes, policing and other third-rail issues in Chicago.

His team’s remarks during the four roundtables suggest his administration is still deliberating, too.

Each year, the mayor’s office hosts a series of community roundtables across the city to ask Chicagoans for their budget wish lists. Johnson added a special roundtable for a constituency he discussed repeatedly during his run for mayor — teens and young adults — and the administration plans to hold public comment sessions after the official budget proposal is released this fall.

The five topics prioritized in the breakout groups were affordable housing, safety, public health, neighborhood development and environmental justice.

During one breakout discussion at Kennedy-King College in Englewood that centered on housing, residents pleaded for relief, including property tax freezes, and said rising taxes are pricing out seniors living near the future Barack Obama Presidential Center on the South Side.

Muriel Jones fears she will soon become one of them. Her two sons have already left, with the first telling her, “Mom, I can’t make it in Chicago,” before moving to Georgia.

“I’m still fighting,” Jones, a 64-year-old who grew up in Chatham, told the mayor. “And I feel like I shouldn’t have to leave my neighborhood. I shouldn’t have to leave my city … but where is the tax relief that people need?”

Despite Jones’ pleas, Johnson didn’t address his promise not to hike Chicago property tax rates and instead pivoted to stress the point that generational wealth is built through homeownership, which he noted would not have been possible for him and his wife without government assistance.

“What I’m hearing from everybody,” he said, is a priority of “having a budget that creates the type of generational wealth and economic stability that’s deeply rooted, so that another generation is not raising children that have to go somewhere else.”

Taxing and spending promises

As a candidate, Johnson was quick to come out against raising residents’ property taxes, a pact he hammered until the very end of the runoff election, even as some doubted its viability. Roughly $1.4 billion of the $1.7 billion the city collected in property taxes in 2023 was used for pension debts, and keeping the city’s tax levy at its current level would force the mayor to find new money to fund his wide-ranging agenda elsewhere.

Former Mayor Lori Lightfoot generally avoided big property tax increases during her single term in office but still implemented some hikes due to rising pension costs and deficits driven by the COVID-19 pandemic. The city’s levy under Lightfoot rose from roughly $1.54 billion in 2020 to $1.73 billion in 2023, partly because of a policy of tying property tax increases to the rate of inflation, something Johnson has derided but has so far not moved to reverse.

Johnson, a former Cook County commissioner, released one of the most extensive economic plans in the mayoral race, vowing to eliminate the city’s structural deficit through a bundle of tax-the-rich levies. They include reinstating a $4-per-employee corporate head tax on large companies, creating a 9.2 cents-per-gallon levy on jet fuel, instituting a $1 or $2 charge on securities trades and increasing the hotel tax from 4.5% to 6%.

Those proposals have not been widely discussed by the mayor in public since he won the election.

The mayor’s hand-picked floor leader, Ald. Carlos Ramirez-Rosa, said he recognizes the high stakes of Johnson’s first budget, given how long progressives have waited to make substantive change at City Hall. But while Johnson’s election symbolizes a new Chicago for them, the 35th Ward alderman said results can’t happen instantaneously or be fully incorporated into the mayor’s initial budget because “we’re going to do this the right way. We’re going to do this the smart way. We’re going to do this the intentional way.”

“(Reestablishing a) Department of the Environment was a promise that the prior mayor ran on, and then did not deliver. Bring Chicago Home was a promise of the prior mayor, and (she) did not deliver,” Ramirez-Rosa said about two key Lightfoot campaign pledges in 2019. “This mayor is committed to fulfilling the promises that he has made to the people of the city Chicago, promises that he was elected to deliver on.”

Ramirez-Rosa declined to share specifics on budget discussions among the City Council caucuses beyond underscoring a focus on “working people” and “crises in our neighborhoods.” On property taxes, he demurred: “I’m not going to speak on my own position on that right now. I think that Chicagoans have felt the burden of property taxes for a very long time, and I think that needs to be part of a holistic approach.”

Another City Council member who leans more moderate, Ald. Michelle Harris, said it was too early to discuss budget particulars but seemed to give the mayor the benefit of the doubt on fiscal prudence.

“I have to see where he’s at,” Harris, 8th, said. “Hey, he may be right down the middle with me.”

Measured progress on 2 key planks

At the Malcolm X College roundtable, Johnson affirmed broader values like meeting pension obligations and rejecting the practice of “balancing the budget on the backs of working Chicagoans.” He evoked his “beautiful” but challenged West Side neighborhood, Austin, before declaring: “The city budget will be defined by its ability to meet the needs of neighborhoods.”

The mayor also shouted out two activist-backed proposals from his 100-day agenda — Treatment Not Trauma and Bring Chicago Home — that have recently gained traction but appear increasingly unlikely to be accomplished in the immediate future.

Treatment Not Trauma calls for a citywide, nonpolice response to mental health crises and for reopening the mental health clinics shut down by former Mayor Rahm Emanuel. A City Council committee took the first step days ago to explore the plan, but it’s unclear how much of it will be reflected in the next budget, as Johnson’s transition team deemed it a “long-term” goal and his allies have noted it requires multiple phases of implementation.

The second proposal, Bring Chicago Home, aims to raise an estimated $160 million annually for social services and anti-homeless measures by more than tripling the real estate transfer tax on the sales of properties valued at more than $1 million. Supporters say the program is direly needed, especially as an influx of migrants has strained the city’s overall social safety net.

There are only two routes to increase the transfer tax: The Illinois General Assembly, which doesn’t reconvene until late fall, can enact it, or citizens can OK the measure through a citywide referendum. Johnson’s aldermanic allies days ago announced they plan to vote this fall on placing the matter on the March 2024 primary ballot. Should voters approve the tax hike, the City Council would have to finalize an ordinance.

The ongoing budget process will continue with a forecast on revenues, expenditures and the deficit by the end of September, followed by the mayor’s budget recommendation to the City Council in October. All city departments will hold hearings on their operations, while aldermen will have the chance to introduce amendments. The final vote usually takes place in November, with the new municipal fiscal year beginning Jan. 1.

Lightfoot, who lost reelection in February, did make a show of leaving behind a minuscule budget shortfall on her way out: $85 million. In 2019, Lightfoot said Emanuel left her with an $838 million gap, while Emanuel blamed predecessor Richard M. Daley for a $636 million deficit.

But the early estimate bakes in the assumption that Lightfoot’s decision to tie the city’s property tax levy to inflation will remain. The city’s pension shortfalls also rose to $35 billion after a bad stock market performance in 2022, sparking further uncertainty.

The city received $1.9 billion in direct federal COVID-19 aid, but that well will dry up during this term. About $1.3 billion of that is already designated for replacing lost city revenues, with the rest being funneled toward areas such as homelessness, tourism, youth opportunities, direct family assistance and public health, including violence prevention.

Perennial budget pressures: Police and pensions

How Johnson will address the city’s grossly underfunded pensions in his first budget also remains to be seen. In 2024, contributions to the city’s four retiree funds are projected to cost $2.4 billion — a sum that will keep increasing in decades to come under Lightfoot’s plan to steeply ramp up payments.

The city’s goal is to reach 90% funding by the mid-2050s, which will be a challenge. The Municipal Employees’ Annuity and Benefit Fund, the city’s largest fund, recorded a funded ratio of just 22.8% by the end of 2022. The ratio for police pensions was just 23.8%; fire was at 20.8%; and the smallest, for laborers, was 44.5% funded. Together, their unfunded liability stands at $35 billion.

But Lightfoot also signed an executive order on her way out requiring the city to establish a “pension advance fund” from 2022 and 2023 budget surpluses — about $640 million — that can only be used for advance pension payments through 2026. While Johnson can undo the order, Lightfoot’s move is seemingly designed to box him in by making him walk away from a measure she touts as fiscally responsible. Johnson’s team has not addressed what he will do.

Then there is the matter of the Chicago police, the city’s biggest budget item, which has become a lightning rod for activists who say more law enforcement does not ensure safety. Johnson himself repeatedly flirted with the “defund the police” movement that broke out in the wake of George Floyd’s murder in 2020 by a Minneapolis police officer, but by the end of his mayoral campaign he said he would not cut “one penny” from the Chicago police budget, currently at $1.94 billion.

Johnson as a candidate vowed to repurpose $150 million in what he described as wasteful spending toward better uses within the Police Department.

He also said he would end the use of ShotSpotter, a gunfire detection technology that officers use to respond to shootings quicker but that critics claim is faulty and leads to dangerous police interactions. However, in June his administration signed off on paying $10 million toward a contract renewal approved under Lightfoot, which his team attributed to an automatic electronic signature by the procurement office.

One resident at the Malcolm X College budget roundtable on public safety told Johnson that the technology is inaccurate and “philosophically, it’s really not what we want to be about. Because it’s too much law enforcement after the fact.”

A Chicago police liaison across the table swiftly chimed in.

“I appreciate that. I think that’s something that we have to work together more (on): trying to evaluate the effectiveness of ShotSpotter,” Mike Milstein, deputy director of community policing, said before also defending ShotSpotter’s usefulness in triaging gunshot victim locations. “I think we’re trying to figure out how do we balance the pros and cons.”

Another long-standing progressive demand, about environmental justice, was met with a judicious enthusiasm at the next roundtable.

Guzman, the mayor’s budget director, said that although Lightfoot did not create a fully funded Department of Environment, the smaller Office of Climate and Environmental Equity she debuted this year does provide room for a bigger budget request in 2024: “It’s not what we’re going to be, but it is a very important first step.”

At the last roundtable at Harold Washington College — dedicated to youths ages 13 to 24 — the presentation displayed the same graphic of a “City of Chicago Organizational Structure” with “Chicago Residents” as the final authority on top, above the mayor and other elected officials.

The image reflected Johnson’s campaign slogan to bring “the people” to the fifth floor of Chicago.

“So, who sits at the top of that? You guys,” Guzman told the room of teens and young adults. “The city of Chicago residents. This is who we’re doing the work for. You’re our bosses.”

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Tribune’s Gregory Royal Pratt and A.D. Quig contributed.