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Chicago mayor breaks pledge, seeks $300 million property tax hike

Brandon Johnson’s proposed budget backtracks on key campaign promise, stirs opposition from owners
Chicago Mayor Brandon Johnson is seeking a $300 million property tax increase to help balance the city’s 2025 budget. (Robert Gigliotti/CoStar)
Chicago Mayor Brandon Johnson is seeking a $300 million property tax increase to help balance the city’s 2025 budget. (Robert Gigliotti/CoStar)
CoStar News
October 30, 2024 | 8:03 P.M.

Chicago Mayor Brandon Johnson is proposing a $300 million property tax hike, reversing himself on a key campaign promise and setting up a new round of opposition from wary property owners who just months ago fought back a proposed increase on real estate transfer taxes.

Johnson formally presented his $17.3 billion budget plan for next year to the City Council on Wednesday. To pass the budget, Johnson will need to win the support of 26 of the city’s 50 aldermen.

Several of them already have voiced opposition to the property tax hike within the budget, which if passed would be the largest in the city since 2015. Property owners would see their bills increase by about 4% on average, and the city’s property tax levy already has more than doubled over the past decade.

The budget proposal comes as other major cities such as New York and Los Angeles also are struggling to deal with budget shortfalls.

Johnson said increased property taxes are needed to address priorities such as affordable housing, mental health services, public safety, and youth employment while honoring pension payments and other obligations.

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"Our budget reflects the commitment to invest in our people and neighborhoods, ensuring that every Chicagoan has the opportunity to thrive," Johnson said in a statement. "We are addressing our challenges head-on with strategic investments and prudent financial management."

Election promise

Chicago’s first-term mayor is backtracking on a promise made during his campaign that he wouldn’t increase property taxes. The reversal comes as he tries to close a nearly $1 billion shortfall and avoid layoffs and cutbacks to key city services.

Landlords and advocacy groups are pushing back against what they already view as an overreliance on real estate fees.

“The mayor’s massive property tax increase is bad for everyone in our city,” Farzin Parang, executive director of building ownership and management group BOMA/Chicago, said in a statement to CoStar News. “Chicago’s office industry continues to face record high vacancy and plummeting building values, compounded by the fact that Chicago already has the highest commercial property tax in the country. These challenges impact thousands of union jobs, shift property tax burden to homeowners, and hurt all our neighborhoods.

“When he promised not to raise property taxes during his campaign, the mayor said it was a ‘lazy form of governance.’ The mayor has been aware of this pending budget gap for over a year, and it is disappointing that he has spent his time in office vilifying businesses and making excuses instead of bringing everyone together to productively address the city’s challenges.”

Johnson’s proposed budget would rise 3% from the previous years as the city continues paying into pension obligations and newer expenses such as housing waves of migrants.

“Faced with the situation between laying off police officers and firefighters versus making sure that we don’t have to have those layoffs, this was a very excruciating process, but it’s one that I recognize in this moment that the alternative is just not acceptable, reducing services and compromising our overall safety,” Johnson said in a briefing with reporters earlier this week, according to Crain’s Chicago Business.

Tax hike opposition

Ahead of Johnson’s formal presentation of the fiscal year 2025 budget, 14 aldermen outlined their opposition to a property tax hike and other aspects of the proposed budget in a letter to the mayor.

“We cannot support a budget that includes a property tax increase. Period.” the letter read. It added that a recent poll of Chicagoans showed 90% oppose increasing property taxes and 79% strongly oppose it.

Aldermen who signed the letter were Brian Hopkins (2nd Ward), Anthony Beale (9th), Peter Chico (10th), Marty Quinn (13th), Raymond Lopez (15th), Derrick Curtis (18th), Silvana Tabares (23rd), Monique Scott (24th), Felix Cardona (31st), Scott Waguespack (32nd), Gil Villegas (36th), Anthony Napolitano (41st), Brendan Reilly (42nd), and Jim Gardiner (45th).

Johnson, who ran on a progressive agenda and took office in May 2023, previously backed an initiative called Bring Chicago Home. That proposal would have used an increase in taxes from property sales of more than $1 million to help fund services to address homelessness.

But real estate groups balked, arguing that higher transfer taxes would slow an already stagnant investment sales market. Opponents also worried that Johnson and other backers of the plan never provided specific details of how the funds would be spent.

After a legal battle to have the referendum removed from ballots by BOMA/Chicago and other real estate groups failed, the initiative was rejected by voters in March.