(Bloomberg) -- Two Chicago City Council committees advanced Mayor Brandon Johnson’s 2025 spending plan and a scaled-down property-tax hike and other levies, moving the city closer to passing its 2025 budget on time.
The city council’s finance committee in a 14 to 12 vote on Tuesday approved a $68.5 million property-tax hike as well as other revenue measures including higher levies on cloud computing, streaming services and cable television. The package also raises fees on parking and expands the ride share surcharge to weekends. The measure still needs the full council’s sign-off.
Johnson is trying to garner enough votes to pass a budget by the Dec. 31 statutory deadline, but disagreements with the 50-member city council over how to close the gap have slowed the progress. He needs 26 votes to pass the spending plan.
Later on Tuesday, the budget committee voted 17 to 16 on a matching appropriation measure. Both items will likely go before the full city council for approval on Friday, according to Budget Committee Chairman Jason Ervin.
“That remains to be seen, but I believe that we’ll get this done this week,” Ervin said.
At the end of October, the mayor proposed a $17.3 billion budget for next year that addressed a $982.4 million gap in the city’s main operating account, called the corporate fund, which pays for public safety, streets and sanitation among other services. The progressive Democrat has rebuffed calls to cut jobs and services and has instead been looking for more revenue.
“Balancing this budget needs to be a shared responsibility across all Chicagoans,” said Alderman Bill Conway, who voted against the revenue ordinance. “The fact that we seem to be balancing this budget with a property tax increase and a lot of new fees does not bring about that shared responsibility and to some extent balances the budget on the backs of working families and taxpayers.”
The Chicago City Council last month unanimously rejected Johnson’s $300 million property-tax hike proposal, leaving Johnson and aldermen negotiating items piecemeal to close the gap. An increase to the cloud tax to 11% from 9% currently is expected to bring in an additional $128 million, the ride share weekend surcharge $8.1 million more, and the parking rate tax increase $11.3 million more.
Ideas for new or higher taxes and fees also have drawn opposition from Chicago’s business community.
Finance Committee Chairwoman Pat Dowell said the property tax increase came down from the mayor’s original ask through collaboration with the council. That’s “a significant decrease at a time when we need sustainable revenue,” she said.
Several aldermen said the most recent budget proposal still does not cut deep enough. Alderman Anthony Beale called the budget “bloated.”
However, Ervin, the budget committee chairman, noted that a recent survey showed that residents don’t want services to be reduced. He said the city needs revenue to support government, and a large part of the budget increases over the years have been from rising pension costs. The city will contribute $2.9 billion to its four pensions, according to the 2025 budget proposal.
Rating firms are watching closely how the budget process unfolds. Last month, S&P Global Ratings put the city on a negative credit watch with at least a one-in-two chance of a downgrade in the next 90 days amid the budget struggles.
(Adds budget committee vote on appropriation ordinance in fourth paragraph.)
©2024 Bloomberg L.P.