Brandon Johnson’s first budget was highly anticipated. The mayor’s supporters and skeptics alike hoped to glean the most revealing signs to date of how he will govern over the coming four years.
As Chicago sports fans say all too often, wait until next year.
The $16.6 billion budget in many ways is a placeholder, aiming to get the city past a $538 million projected gap between revenues and expenses while launching a few modestly priced initiatives signaling to supporters that Johnson isn’t abandoning his vision for a more “equitable” city.
What happens between now and this time next year will tell far more of the true tale of how Johnson’s first term will go.
First of all, a revolutionary or transformative document this budget is not. The progressive standard-bearer took office five months ago after promising to pursue $800 million in new taxes on business and the wealthy to finance programs and services aimed at ameliorating Chicago’s long-standing tale of two cities.
Some of those — like the controversial proposed tax on financial transactions that Chicago’s derivatives exchanges warned would impel them to find new headquarters out of state — are essentially dead, given that they require state approval and Springfield’s political leaders are opposed. Others, like the problematic “mansion tax” that at its core is a higher levy on commercial property sales,
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will have to wait for a voter referendum, expected this coming March.This spending blueprint buys the mayor another year to find and win approval for revenue sources to finance his progressive agenda — something he made clear he’s still intent on doing. For now, though, from our vantage point, this budget on balance strikes a reasonable pose.
That’s not to say there aren’t some causes for concern. To help close the budget gap, Johnson leaned more heavily on a favorite budget maneuver of past mayors — reclaiming dollars set aside in tax increment financing districts — than any of his predecessors have for the past 15 years.
TIF is a one-time revenue source, so it doesn’t address structural imbalances.
Likewise, Johnson’s financial team projects a $187 million increase in the coming fiscal year in revenue from local taxes. They say much of that is expected from higher hotel and amusement levies, fueled by events in the city. We’ll see, obviously. But the entertainment sector remains under economic stress and international travel is subject to worrying geopolitical developments. So unless we missed the news that Taylor Swift is returning, color us skeptical.
Here’s the good news. Johnson is continuing the Lightfoot administration’s policy of pumping more into the city’s woefully underfunded pension funds than is actuarially required. Good job there, mayor.
To his credit, he refused to take the bait when Lori Lightfoot tried to hem him in with an 11th-hour executive order continuing that policy in the waning days of her term. Johnson surely was tempted to rescind that order, both to show supporters he was moving on from the Lightfoot years and, more practically, to use that $300 million-plus for his agenda. That he didn’t is helpful for the city’s financial future.
Another Lightfoot policy is falling by the wayside, though. Johnson promised during the campaign to reverse adjusting the city’s annual property tax levy by the rate of inflation, which effectively raises taxes by that rate each year. The good news for homeowners and businesses, of course, is that the city’s part of their property tax bill will be flat.
Beware down the road, though. The rationale of that approach was to avoid the need for sticker-shock-level increases in years when the city needs the money and has no other practical revenue-raising options.
Fingers crossed. We get that it was a campaign promise Johnson couldn’t afford to break, at least this early in his tenure. But ratings agencies like the Lightfoot approach for a reason, and in a high interest-rate environment the city can’t afford to jeopardize the hard-won credit ratings gains during the Lightfoot years.
The budget reestablishes the Chicago Department of the Environment at a relatively modest cost. The mayor’s promise to reopen mental-health clinics closed during the Rahm Emanuel years gets a nudge forward, with the budget calling only for two “pilot” clinics within existing buildings.
Another Johnson priority, summer jobs for youths, gets enough funding to add 4,000 jobs, well short of his promise to double summer employment but a welcome investment. Keeping more of Chicago’s youths involved in productive summer activities shouldn’t be controversial.
The major wild card, of course, is the migrant crisis. The Johnson administration had no update in the budget on its most recent projection of more than $300 million to house and otherwise care for the thousands of people being bused into the city every day, mainly by Texas politicians. The budget allocates just $150 million for migrant care, an apparent attempt to pressure the state and feds to do more.
That seems a dubious strategy and brings us back to reality. A budget is just a document with projections of both spending and revenue that, by their nature, will be inaccurate. The only question is by how much.
Every mayor comes to office with ideas and initiatives. Nothing wrong with that. But most quickly learn that the job is much more about prudent management and responding to changes on the ground, ranging from worrying to alarming to full-blown crises, than programs with catchy names.
In the buses arriving from Texas, Johnson already is confronted with a full-blown crisis that isn’t close to being brought under control. Financially or otherwise.
After this long-awaited budget, the shape of the Johnson years remains what they were before: wait and see. From our point of view, that’s a relief.
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