Illinois Insights Special Edition: Chicago Mayor Brandon Johnson Unveils $17.6 Billion FY2027 “Fair Share Budget”

Chicago Mayor Brandon Johnson Unveils $17.6 Billion FY2027 “Fair Share Budget”

Mayor Brandon Johnson today introduced a proposed $17.6 billion FY2027 City of Chicago budget, including $13.6 billion in local funds and $4.0 billion in grant funds. The proposal would increase the City’s Corporate Fund to $6.54 billion, up 4.6% from FY2026, while relying on a mix of new revenue measures, operational savings, and one-time resources to close an estimated budget gap of $652.5 million. The administration has branded the proposal as its “Fair Share Budget,” emphasizing corporate taxation, housing investments, public safety programs, and workforce initiatives while avoiding a property tax increase, layoffs, or service reductions.

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Key Takeaways

No Property Tax Increase

• The proposal does not increase the City’s base property tax levy.
• The overall levy would grow approximately 0.6% due to new construction entering the tax base and expiring TIF districts.
• The FY2027 levy is budgeted at approximately $1.87 billion, helping support pension contributions, debt service, and library operations.

Significant New Revenue Measures

The budget proposes roughly $447 million in revenue enhancements, including:

• A new Equitable Employer Tax (EET) would apply to employers with more than 125 full-time employees, requiring businesses to pay $25 per employee per month. The proposal revives the so-called “head tax” concept that was rejected by the Chicago City Council during last year’s budget negotiations. The administration projects the tax would generate approximately $113.8 million annually and argues it is intended to shift more of the City’s revenue burden onto its largest employers.
• An increase in the Personal Property Lease Tax (PPLT) from 15% to 20%, projected to generate approximately $235 million. The existing 15% rate would remain in place for vehicle leasing, while film and television production equipment would receive a reduced 11% rate.
• An increase in the City Sports Wagering Tax from 10.25% to 20%, generating an estimated $37 million in additional revenue.
• A doubling of the City’s off-premises alcohol tax rate from 1.5% to 3%.
• A new Package Waste Tax would expand the City’s existing Checkout Bag Tax by applying a $0.15 tax per package on a broader range of retail carryout, delivery, and shipping packaging. The administration projects the proposal will generate approximately $9 million in new annual revenue while reducing packaging waste and litter.

TIF Surplus Plays Major Role

The administration plans to declare a $521.9 million Tax Increment Financing (TIF) surplus, a substantial amount but significantly smaller than the record $1 billion TIF surplus declared in FY2026.

Projected distributions include:

• $117.9 million to the City of Chicago.
• $286.1 million to Chicago Public Schools.
• $9.4 million to the Chicago Public Library.

One-Time Resources Remain Part of Budget Solution

In addition to recurring revenue measures, the proposal relies on several one-time resources, including:

• $75 million from the recently approved Chicago Parking Meter transaction. The budget assumes the City will use the $75 million upfront payment associated with the recently approved parking meter concession transaction as part of the funding for a planned $363 million supplemental pension payment in FY2027. The proposal has already prompted debate among some alderpersons involved in negotiating the parking meter agreement, who have argued the $75 million should be used for an additional pension contribution on top of the City’s planned supplemental payment.
• The budget proposes using $37.7 million from the Chicago Community Catalyst Fund, a roughly $57 million fund created under former Mayor Rahm Emanuel to support public and private investment projects. The fund has seen limited use in recent years, aside from approximately $21 million deployed during the COVID-19 pandemic for small business lending programs that were subsequently repaid. The administration is proposing to transform the fund into the BUILD (Building Up Local Independent Developers) Fund, which would eliminate existing requirements that investments generate market-rate returns.

Pension and Debt Obligations Continue to Grow

The proposed budget includes approximately $2.94 billion in pension contributions, including the full statutory contribution and a $363 million supplemental advance payment, bringing total pension-related spending to nearly $3.0 billion.

The budget also reflects growing debt-related costs:

• Debt service supported by property taxes and the Corporate Fund is projected at $488.9 million, up from $430.1 million in FY2026.
• As part of the budget package, the Johnson administration is seeking City Council authorization to issue up to $480 million in bonds for what it describes as “extraordinary levels of settlements.” According to the proposal, at least $250 million would be spent in FY2027, including funding for a portion of the recently approved $260 million Guevara global settlement and approximately $120 million for other previously approved settlements. An additional $100 million would be available to cover FY2027 settlement costs that exceed the City’s budgeted settlement reserves.

Housing, Public Safety, and Youth Programs Drive New Spending

The budget includes approximately $131.5 million in new investments, including:

Housing and Homelessness ($30 million)

• $15 million for homelessness services.
• $13 million for rental assistance and the Chicago Low-Income Housing Trust Fund.
• $2 million for the Flexible Housing Pool.

Youth Employment ($24 million)

• Funding to support an expansion to approximately 40,000 youth summer jobs, which the administration says would be a record level.

Libraries ($30.9 million)

• Additional funding to maintain full Chicago Public Library operations.

Streets and Sanitation ($14.5 million)

• Expanded forestry, rodent control, quality-of-life, and neighborhood services.

Violence Prevention and Mental Health

• A $7 million increase for Community Violence Intervention programs, bringing total CVI spending to approximately $40.6 million.
• Expansion of the CARE program to seven days per week.
• Opening of an additional public mental health clinic.
• Formal codification of the Office of Gun Violence Reduction and Department of Community Wellness and Safety framework.

Savings and Efficiencies

To help offset spending increases, the administration identifies approximately $119.8 million in savings and efficiencies, including:

• $85.4 million from operational efficiencies.
• $34.4 million from personnel-related savings and vacancy management.

Other Notable Provisions

• The budget includes a vehicle debt amnesty program projected to generate more than $6 million while allowing residents to resolve outstanding liabilities with reduced fees.
• The City continues to project approximately $49 million in FY2027 revenue from the Social Media Amusement & Responsibility Tax (SMART).
• The administration proposes a new SEED (SEDA Employee Expansion & Development) tax credit, allowing employers subject to the Equitable Employer Tax to receive credits for creating jobs in designated socioeconomically disadvantaged areas.

Looking Ahead

The proposed FY2027 budget now moves to the City Council Committee on the Budget and Government Operations for a series of department-level budget hearings beginning October 26 and continuing through November 10. The City Council must adopt a balanced budget by December 31.

For More Information

Mayor Brandon Johnson’s prepared FY2027 budget address is available here. The accompanying budget overview and budget recommendation documents provide additional details on the proposal, which can be found here. 

If you have questions about the proposed budget, its potential policy implications, or the upcoming City Council budget process, please reach out to a member of the Chicago Cozen O’Connor Public Strategies team.

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