Chicago Mayor Proposes Head Tax, Cloud Tax Hike in 2027 Budget to Close $882 Million Gap
Chicago Mayor Brandon Johnson on Wednesday released a $17.6 billion 2027 budget that would close an $882 million deficit by reviving a head tax on large employers, raising the city's cloud computing tax from 15% to 20%, and borrowing $480 million to pay police settlements.
The proposal, unveiled as Johnson and most alders enter February elections, avoids a property tax increase, higher garbage fees, or significant layoffs. It maintains 36,037 full-time city jobs while cutting about $120 million in costs through operational efficiencies and personnel savings.
The revived head tax would charge companies with more than 125 employees $25 per worker each month. Johnson's office estimates it would raise about $113.8 million per year. Businesses in certain low-income areas could receive rebates.
The budget also would raise the personal property lease transaction tax, known as the cloud tax, from 15% to 20%. Exceptions would remain for vehicles and equipment used in movie making.
A new package waste tax would add 15 cents to boxes or containers used to deliver or carry out non-food items. The mayor's office projects that tax would generate $9 million.
The $480 million borrowing plan would cover the city's recent $260 million settlement with 17 people who alleged former police officer Reynaldo Guevara framed them for murder. Another $120 million would go to other settlements approved in 2026, and $100 million would pay for 2027 settlements.
Johnson said during a Tuesday night press briefing that the budget "expresses equity and fairness" and works to improve life for working people while addressing what he called structural damage inherited from previous administrations.
Ald. Scott Waguespack, a frequent budget critic, said Johnson is proposing to spend money the city does not have and raise taxes instead of implementing efficiencies and collecting debt. Waguespack called the head tax anti-growth and said Johnson does not have the votes.
The proposal is likely to face resistance from a City Council that blocked Johnson's budget last year and has grown increasingly wary of new debt. Alders recently passed a measure requiring 30 council votes to take on new debt, and the council failed to override Johnson's veto of that plan.
Civic Federation President Joe Ferguson said borrowing in the short term to pay legacy liabilities has some merit and should be discussed. But Ferguson said he was deeply disappointed that the budget does not consider more savings and efficiencies.
The City Council will now begin hearings and negotiations on the budget ahead of a required vote before the end of the year.
