Understanding the Origins of Mayor Johnson's Budget Proposal
On Nov. 15, 2023, the Chicago City Council approved Mayor Brandon Johnson's budget proposal, allowing him to fulfill his campaign promise of addressing the city's most pressing urban issues. Millions of Chicagoans will rely on Johnson's budget to decrease homelessness rates, increase public safety, and foster an inclusive economy.
The progressive candidate promised to tackle homelessness by supporting the Bring Chicago Home campaign, which funds homelessness services by increasing transfer taxes on sales of properties worth over $1 million. He is seeking to increase the real estate tax on multi-million dollar properties to create a revenue stream for public housing and other services that address homelessness. Mayor Johnson's progressive stance on public safety includes investing in youth employment, anti-violence and domestic violence programming, and creating a new Mayor's Office of Community Safety, which will work alongside the Office of Gun Violence Prevention. At the heart of Johnson’s progressive policies is the Better Chicago Agenda. Johnson aims to tax the suburbs, airlines, and ultra-rich, culminating in a projected $800 million in revenue for his public investments. His administration also estimates that Chicago's structural deficit—the gap between the revenue gained and the city's expenses—will start at $500 million and grow to $600 million.
Mayor Johnson will grapple with this $500 million structural deficit as he launches his latest budget proposal: The People's Budget. This $16.6 billion proposal is an essential component of the Mayor's progressive agenda to uphold campaign promises regarding housing and public safety and foster economic opportunity for youth.
The People's Budget
Mayor Johnson aims to address rising homelessness rates through his new budget. The Chicago Point-in-Time (PIT) Count estimates that approximately 6,000 people experience homelessness in Chicago on a given day. 5,000 of these individuals reside in homeless shelters, while the rest live on the street or in places not designed for human habitation.
The People's Budget invests $250 million to combat this homelessness crisis. Funds will expand the City's Flexible Housing Pool, the Department of Housing's Home Repair Program, and other support systems for Chicago's shelter network. The City's Flexible Housing Pool seeks to improve individual health outcomes by lowering costs within the healthcare sector. By connecting people to affordable and stable housing, the program also aims to reduce the usage of hospitalizations and emergency services. The Flexible Housing Pool also aims to reduce tensions between landlords and tenants by filling units with guaranteed on-time rental payments. Lastly, the budget also provides $10 million for the Home Repair Program, which facilitates repairs for lower-income homeowners, and the Mayor's Office for People with Disabilities Home Modification Program, which ensures residents with disabilities can have accessible homes.
By investing in these public programs, the budget will equip such organizations with the financial resources to facilitate programming and attempt to reduce homelessness in Chicago. It will increase the scope of impact, providing more residents greater access to housing and pathways to improve public health.
Besides reducing homelessness, Mayor Johnson hopes to utilize part of the budget to rectify the city's approach to public safety. Johnson will use part of the budget to establish the first-ever Office of Community Safety, an essential policy platform during his campaign. This program will be Chicago's primary source for promoting violence prevention. The office aims to advance anti-gun violence initiatives by partnering with law enforcement, community organizations, and research centers that explore new methods of ending violence.
Additionally, Mayor Johnson hopes to allocate $100 million to youth employment, anti-violence and domestic violence programming. This investment will empower organizations like the One Summer Chicago program, which increased youth employment by 19 percent within the last year. Not only does this investment seek to promote a more inclusive economy, as youth will have access to sustainable employment opportunities, but it also aims to reduce crime rates throughout the city. Earlier this year, the University of Chicago's Crime Lab reported that, since 2019, 32 percent of those arrested for robbery and 49 percent charged for carjackings were 17 years old or younger.
A Taxable Dispute
However, if Mayor Johnson is to succeed in his plan to tackle homelessness and promote public safety through his $16.6 billion investment, he will have to overcome his biggest challenge: gaining funding without raising property taxes.
Because base property taxes in Chicago were worth $17.6 billion in 2022, Johnson will strive to close the structural deficit of $500 million by increasing Tax Increment Financing (TIF) and strategically utilizing the city's fund balance. TIF is a funding tool that promotes private and public investments within Chicago, and when an area becomes a TIF district, the property tax that area generates is set at a base amount. As the property values increase, the tax growth above the base amount becomes funds for the district's redevelopment projects. Johnson’s decision to increase TIF aims to close this structural deficit without raising property taxes. Although Johnson is investing $16.6 billion and receives $17.6 billion from property taxes, other costs relating to pensions, the ongoing migrant crisis, and expenditures from prior administrations account for the massive deficit. Johnson will increase TIF to gain funding without raising property taxes.
Another source of critique is the way Johnson plans to allocate the budget. He will not fully fund most of his investments and, instead, will subsidize them through "short-term investments." Instead of investing $16.6 billion at once, Johnson will utilize the city’s fund balance by making short investments that hope to total the budget's full amount by the end of the year. The budget's first short-term investment relies on a one-time revenue of $786.5 million, which Johnson will split across his programs. Opponents are concerned about whether he will keep his promise of not raising property taxes.
Additionally, as the influx of migrants increases the rate of homelessness, and 15,000 migrants crowd city shelters and O'Hare International Airport, critics argue that the current migrant crisis can influence the budget's effectiveness—approximately $200 million of the $500 million deficit comes from migrant aid spending. As the Johnson administration spends $40 million a month on the migrant crisis, critics claim that avoiding tax hikes is only possible in the short term; they argue that a future budget crisis is on the horizon because the budget inadequately allocates funds.
With winter approaching, city officials will experience a major housing crisis and struggle to find sustainable locations to house migrants. Thus, providing adequate funding to support migrants, especially within homelessness services, is expected to be a major concern. Johnson pledged to create a 13-person Office of New Arrivals, which will be part of the Department of Family and Support Services. Ultimately, the migrant crisis will cost taxpayers approximately $361 million by the end of 2023, and critics are pressing Johnson to reveal how the influx of migrants will influence his ability to disperse the budget.
Both the migrant crisis and the uncertainty surrounding Mayor Johnson's promise to avoid raising taxes were the essential points of debate when the City Council gathered to vote on Johnson’s budget proposal. The City Council voted 41-8 to approve the budget, with the "no" votes stemming from the council's most conservative members. Following the City Council's first approval, there will be more hearings to dissect Mayor Johnson’s budget proposal and its broader financial implications.
As Johnson advances his progressive agenda with his budget, it will be essential to see if he keeps his campaign promise and refuses to raise property taxes. Conservatives have pushed back by questioning how the Johnson administration will obtain the funds to ensure the budget does not harm the city's financial health long-term. More specifically, they have raised concerns about how future deficits for 2025 and 2026 will affect Mayor Johnson’s ability to implement the budget while keeping his campaign promise of not raising property taxes. These future deficits depend on how much government spending will continue to increase. Compared to the 3.7 percent increase in inflation within the last year, spending increased by $480 million—4.1 percent. As spending is growing faster than inflation, an October report by Chicago Public Schools estimated that the city will have a budget deficit of $600 million, at the bare minimum, next year.
This estimated deficit, combined with the increasing number of migrants, puts more pressure on the Johnson administration to balance the budget sufficiently. It will be an enormous challenge for Mayor Johnson—not only to reduce spending and generate revenue—but to maximize the effectiveness of the budget without posing a significant long-term strain on the city's financial health.
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