Council-Backed Budget Could Lead To $130 Million Shortfall This Year, Mayor Says

CITY HALL — Mayor Brandon Johnson took another shot at the City Council-backed 2026 budget on Tuesday, saying some of its revenue ideas have so far fallen flat — meaning Chicago could face a more than $130 million shortfall this year.

But the coalition of alderpeople who backed the spending plan, which passed in late December without Johnson’s proposed corporate head tax, said the mayor has been purposefully slow-walking parts of the budget’s implementation in an attempt to “shift blame away from the failures of his administration.”

The dueling volleys on Tuesday signaled there is still plenty of bad blood between Johnson and City Council members stemming from the bruising budget process late last year — and they likely foreshadow another bitter fight this fall as city leaders craft next year’s spending plan.

Last year, Johnson introduced a 2026 budget proposal that included a per-employee corporate head tax on companies over a certain size, as well as a “first of its kind” tax that charges large social media companies a small fee per user, among other revenue ideas.

The plan received immediate opposition from some alderpeople, especially over the revival of a head tax, which opponents labeled a job killer. Alderpeople eventually began crafting their own “alternative” budget, which included a suite of new revenue ideas and avoided the head tax entirely.

The final budget package that was approved notably legalized video gambling machines in bars and included selling city-owed debt to outside collectors. The plan also allowed for ads to be placed on bridge houses and light poles and for “augmented reality” licensing on city properties, such as through games like Pokemon Go.

But after the budget passed just before Christmas, Johnson chose neither to sign or veto it, blasting the legislation as deeply unbalanced. In particular, he called out the debt sale stipulation as “morally bankrupt” and signed an executive order to prohibit the sale of city medical debt.

Backers of the budget at the time countered that the plan was fiscally responsible and based on solid forecasts and expert opinions. It went into effect Jan. 1.

Johnson, however, has remained a frequent critic of the budget that got passed. On Tuesday, his administration released a mid-year budget report with preliminary revenue numbers and forecasts showing that some of the alternative budget revenue ideas weren’t panning out — which could lead to an at least $130 million budget hole this year.

In particular, the mayor said his team has attempted to find a buyer for the city’s vehicular debt, but “to date, no buyer has been identified,” making a sale impossible. Alderpeople had estimated a debt sale could bring in about $90 million for the city coffers.

Augmented reality licenses and selling advertising space on city bridges and light poles have also not yielded any revenue, the report shows.

“Gaps have emerged due to the regressive revenue options that members of the City Council that were more aligned with corporate interests put forward. Their incomplete and inconsistent assumptions have been unfounded,” Johnson said.

“I want to say this clearly: There were other options. We did not need to cede to big money interests and fall back on the tired practice of balancing budgets on the backs of working people,” he added, referring to the head tax proposal, one version of which his administration estimated would garner around $100 million.

Johnson instead touted revenue collections from the social media and online sports betting taxes, as well as other city revenue streams that he said have so far outperformed projections this year.

In a statement and detailed response to the mayor’s comments Tuesday, the group of alderpeople who worked to craft the alternative budget proposal last year — who call themselves the Budget Accountability Coalition — slammed Johnson’s budget criticisms as purely political.

The group launched in February with 26 City Council members, according to a press release. Tuesday’s statement was issued through Ald. Samantha Nugent’s (39th) office.

“Instead of executing the financially sound budget that City Council passed last year, Mayor Johnson and his administration have spent six months slow-walking the implementation of new revenues and efficiencies designed to close our budget deficit and prevent this administration from creating excuses to raise taxes on businesses, jobs, and working families and skip the remainder of our advance pension payment,” the statement said.

“Chicagoans deserve transparency and the truth from the mayor instead of attempts to shift blame away from the failures of his administration.” 

The group also accused Johnson of making little to no effort to implement the augmented reality licensing or advertising ideas included in the alternative budget.

Another recent sticking point has been over video gambling machines, which the City Council legalized in this year’s budget although the devices have not yet come online, despite several businesses being granted state licenses for them.

The 2026 budget relies on $6.8 million in revenue from the machines, but Johnson has pushed for the council to change course and disallow their use. One issue is strident opposition from Bally’s, which is building a permanent Chicago casino in River West. Bally’s officials have said the company’s agreement with the city gives it exclusive rights to operate video gambling within city limits.

Johnson’s administration has warned the city could lose a $4 million community benefits payment from Bally’s if video gambling machines are allowed to be installed at bars and restaurants. A recent City Council committee meeting convened to discuss a potential ban ended abruptly and without any action.

The council budget group said that opposition by the mayor to policies approved by alderpeople has become “the pattern, not the exception.”

Regarding video gambling, “the administration opposed the policy, sat on the required state notification for months, and is now watching Bally’s lobby … gut it,” the group said. “The council can’t force an administration to do its job. It can only build the revenue in and wait to see if it gets executed.”

Johnson on Tuesday stopped short of saying if the potential budget hole this year would mean layoffs of city employee or cuts to services. He defended his administration’s handling of the budget, in particular the potential debt sale, despite opposing parts of it.

“My administration has worked diligently to implement it,” he said.

Meanwhile, Johnson’s budget team is gearing up to release its annual budget forecast for 2027 in August.

The mayor’s appointed budget task force last month said the city is facing a projected $680 million shortfall next year, although the Mayor’s Office at the time did not confirm that number. A preliminary estimate released last year put the number at more than $1 billion.