Chicago Mayor Brandon Johnson’s task force outlined 39 ways to raise up to $1.65 billion to close Chicago’s 2026 budget deficit. More taxes is the wrong answer.
Mayor Brandon Johnson’s Chicago Financial Future Task Force released its interim report, Options for Chicago’s Financial Future, with 39 “revenue-generating measures” it claimed could yield anywhere from $630 million to $1.65 billion in additional revenue.
Among the measures released Sept. 16 are 23 recommendations for increasing existing fines and fees to bring in up to $475.2 million in new revenue, 12 new or increased taxes to bring in up to $1 billion in higher taxes and four additional measures that could generate up to $177.5 million for city coffers.
Yes, Chicago leaders can keep figuring out ways to take more money from residents, visitors and businesses. But the problem is not revenue, it’s spending.
The task force now will look at fixing city leaders’ spending habits, but those controls should happen before considering 39 tax-and-fee drags on the city’s residents and economy. Here is what should happen with spending.
Improving Chicago’s long-term fiscal health requires restraint, not more revenue
Chicago is facing a projected budget deficit of $1.15 billion for fiscal year 2026, but the problem isn’t city revenues. Those have reached all-time highs in recent years.
The problem is persistent overspending. Chicago’s total expenditures have increased by nearly $7 billion, up 62% from 2019 and rising over twice as fast as other major cities.
While previous budgets have been buoyed by billions in temporary federal pandemic funding, virtually all that money has now been spent. Chicago’s budget deficits are growing in part because that temporary funding was used to “permanently” add expenses.
Rather than turning to Chicagoans for billions in higher taxes, city leaders need to pursue structural reforms to rein in government spending. Fortunately, the city’s task force has begun some of that work already, recommending a variety of savings and efficiency measures that could save the city up to an estimated $455.5 million.
The City Council Office of Financial Analysis has also made multiple recommendations for improving city finances without turning to tax hikes. Utility pole ads, light duty for injured workers and using a contractor to handle city vehicle auctions could all help.
While these offer a good starting place, Chicago needs lasting, structural reforms that constrain spending so expenditures match revenues without relying on Chicagoans for ever-increasing taxes, fines and fees. Pensions, permanent spending from temporary funds and personnel costs are all part of that lasting fix.
Fine, fee changes: 23 ways to nickel and dime residents for another $475.2 million
The greatest number of changes proposed by the task force were for 23 various fines and fees. Large increases are being pondered for congestion surcharges on rideshare services, garbage collection and delivery fees. Smaller proposals include increasing permit fees on barricades, Dumpsters and signage.
The task force also recommended linking fine and fee increases to inflation – meaning they will automatically increase every year without politicians publicly debating and voting on hikes.
The largest proposed fee increase would increase the garbage collection fee from the $60 million collected today to up to $296.9 million. For each dwelling unit, the fee would increase from today’s $9.50 per month to as much as $55.
That’s a 478% increase. For a single-family home, garbage collection would suddenly increase from $114 per year to $660 a year.
While framed as “cost recovery,” the proposal is effectively a regressive tax on households already paying among the nation’s highest property taxes – which residents expect will pay for basic government services. Many municipalities, including large cities such as New York and Houston, collect trash without direct fees.
The next largest fee change would be an expanded congestion surcharge on rideshare trips, expected to generate up to $103 million. The “congestion tax” would expand from downtown, O’Hare and Midway airports, Navy Pier and McCormick Place to include eight additional areas, which would catch up to 25% of all city traffic.
At a time when office occupancy is only 60% of pre-pandemic levels and retail vacancies exceed 25%, this tax would discourage exactly the economic activity Chicago needs to revive. Instead of revitalizing downtown, it risks further decline.
Other proposals – higher zoning review fees, sidewalk café permits, driveway permits and a new retail delivery fee – would collectively raise tens of millions. But these measures target entrepreneurs, small businesses and consumers who can least absorb the costs. Each new barrier to entry or increase in fixed costs makes Chicago less competitive compared to nearby suburbs and other cities.
The report recommends increasing code enforcement fines and recycling fines. While these may only generate $1-3 million annually, they are emblematic of a bigger problem: the city’s reliance on punitive enforcement as a cash stream.
Chicago already has a reputation for predatory fines, from vehicle sticker tickets to late fees, that disproportionately impact low-income households. Research has documented how these policies can push families into bankruptcy.
Tax changes: 9 changes to current taxes, 3 new taxes for $1 billion.
The largest revenue source the task force identified were from raising current taxes and enacting new taxes on Chicagoans, increasing their tax burden by up to $1 billion.
Of the nine increases to current taxes and three new tax proposals suggested, the change with the largest cost would be to expand the sales tax on services. While this change would require action from state lawmakers, previous analyses show expanding sales taxes to encompass all consumer services would increase the burden of Chicago’s sales tax by up to $305 million.
If this change were to occur, other municipalities would also likely be affected, meaning Illinoisans across the state would also face higher sales taxes. Those changes were estimated to increase statewide sales tax burdens by up to $2 billion.
The tax proposal with the most immediate potential to be enacted is for the city to keep its local grocery tax, which is set to expire in 2026. While state law removed the statewide grocery tax effective Jan. 1, 2026, local municipal leaders were empowered to levy their own grocery taxes.
If Chicago decides to do so, the task force expects to generate $80-$83 million in additional revenue. The city has until Oct. 1, 2025, to decide whether it will impose the 1% tax on grocery sales.
The tax proposal with the most significant long-term consequences for Chicagoans is the recommendation to resume the city’s automatic increase in property taxes. This practice was suspended in 2023 after decades-high inflation threatened major property tax hikes.
Since then Johnson has continued to promise his administration would not pursue property tax hikes. That promise was broken when he proposed a $300 million property tax hike in the 2025 budget, but city council members forced him to keep his word by unanimously rejecting the hike.
If the city resumes the automatic increase in property taxes tied to inflation, the property tax hike is expected to tally $56 million next year. There would likely be additional tax increases every year thereafter, but elected leaders could escape accountability because they would no longer vote for the property tax hikes.
Other recommended changes to current taxes include increasing the city’s liquor tax to generate up to $120 million, hiking bottled water taxes to increase tax collections up to $27.9 million and raising the plastic bag tax by up to $13 million.
The task force also recommended three additional taxes the city could enact.
The largest would be reinstating a $4-per-employee head tax for businesses with more than 50 employees who perform work in the city. That tax could increase business taxes by up to $25.6 million.
The tax would be a direct, punitive tax on employers and discourage businesses from hiring in the city. The city previously had such a tax but repealed it in 2013 because it was hurting hiring and the city’s economy.
Another new tax proposal was for a city internet gaming tax of $0.50 per sports wager. The move could increase gambling taxes by up to $17 million.
The task force also recommended implementing a Payments In Lieu of Taxes, or PILOT, program to collect “voluntary payments from tax-exempt institutions to offset revenue losses from property tax and other tax exemptions.” They projected up to $52 million would be voluntarily handed to the city.
The task force recommends the state make two additional changes to increase city revenues. The first would be expanding the 911 surcharge to include prepaid wireless services, which would increase city corporate fund revenues from the tax by up to $12.5 million.
Finally, the report also recommends the city request the state adjust the revenue-sharing ratio of the Local Government Distributive Fund, which sends a portion of state income taxes to municipalities based on population. The revenue-sharing ratio was previously 10% of state income tax collections prior to the 2011 state income tax hike, which dropped the ratio down to 6% so the state could capture all of the increased income tax revenue rather than sharing it with local governments.
Currently, local governments receive 6.47% of individual income tax collections and 6.85% of corporate income tax collections. Increasing the local government share to the full 10% would result in an additional $250 million for Chicago.
While this proposal has merits and may offer local governments some recourse for controlling local tax increases, taxpayers would need protections to ensure the increase in revenue sharing with local governments would not be replaced with increases in other state taxes. Otherwise, the proposal would result in a net tax increase.
Other ideas: 4 more changes to generate up to $177.5 million
The task force recommended some additional changes that would yield one-time revenue increases for the city. First, is called for “optimizing” the city’s real estate portfolio through a combination of selling properties, exiting and renegotiating leases, and consolidating building occupancy. They claim the moves could increase revenues by up to $29.5 million.
The remaining three proposals involve changes to the city’s tax increment financing districts – special zones established by the city which are supposed to fund investment in blighted areas.
The first is to declare as large a tax increment surplus as possible, which is essentially a one-time fund sweep that would redirect money from the districts to the city’s budget. If the city were to match last years’ record-setting district surplus declaration, the city would receive an additional $137 million in one-time revenue.
Second, the task force proposed allowing 13 tax increment financing districts that are either due or eligible to “expire” to send property taxes previously collected by the district to local governments. That would increase city property tax collections by $11 million.
Lastly, the report recommended the city analyze tax increment financing districts for potential early termination. The property tax collections would then be sent to local governments.
While the efficacy of the city’s tax increment financing districts is questionable, these districts do not impede growth in city property tax revenues and Chicago’s property tax burden is already among the highest in the nation. Ending the districts without returning any of the collections to taxpayers would be a missed opportunity for the city to provide meaningful tax relief at no cost to the city budget.
City leaders may be eager to collect another $1.6 billion but taking that money is short-sighted. They must control spending.
Otherwise, the city’s population and tax base will continue to shrink, leaving them scrambling for the foreseeable future to figure out how they can squeeze more from the remaining Chicago residents and businesses.
