City Council Passes Budget Without Head Tax; Johnson Weighs Veto

The Chicago City Council dealt Mayor Brandon Johnson a stinging defeat Friday, passing a nearly $16.6 billion budget that strips out his signature corporate head tax over his fierce objections.

The vote was 30-18, a decisive margin that reflects deep divisions between the mayor and his council rivals over the city’s fiscal future. The passage came after weeks of tense negotiations and sets up a potential veto confrontation with just days remaining before the end-of-year deadline.

“I want to be clear: I have serious concerns about this budget,” Johnson said immediately after the vote. “It balances the books on the backs of working families while letting large corporations off the hook.”

The mayor has not explicitly committed to a veto, saying only that he would “review my options” before making a final decision. He has 10 days to sign, veto, or allow the measure to become law without his signature.

A Budget Without the Head Tax

The council’s budget relies on a mix of alternative revenue sources to close a projected $1 billion deficit. These include increased fees on ride-share companies, a higher tax on luxury goods, and drawing down reserve funds that critics warn will only delay the city’s fiscal reckoning.

Conspicuously absent is Johnson’s proposed $3.50-per-employee tax on businesses with more than 100 workers, which would have generated approximately $100 million annually. The measure faced overwhelming opposition from the business community and never gained traction among moderate alderpersons.

“The head tax was dead on arrival,” said Alderman Brian Hopkins (2nd), who led the opposition. “We’re not going to pass a job-killing measure just because the mayor wants it. Chicago needs to be competitive, and this budget makes us more competitive.”

Johnson’s Allies Cry Foul

Supporters of the head tax accused their colleagues of caving to corporate interests at the expense of city services.

“This budget is a gift to corporations that are already making record profits,” said Alderman Rossana Rodriguez-Sanchez (33rd), one of Johnson’s closest allies. “Meanwhile, our schools are underfunded, our mental health clinics are closing, and our streets are full of potholes.”

The budget does include modest increases for some city services, including a $50 million boost for violence intervention programs and additional funding for pothole repairs. But progressive alderpersons argue those investments fall far short of what Chicago needs.

“We’re rearranging deck chairs while the ship is sinking,” said Alderman Carlos Ramirez-Rosa (35th). “Without new revenue, we’re just kicking the can down the road.”

CTA Funding Dispute Looms

Adding to the city’s fiscal headaches, the Trump administration threatened this week to withhold up to $50 million in federal transit funding over what it called the CTA’s inadequate security plan. Federal Transit Administration officials said the agency’s proposal “fails to meet the need for immediate, measurable corrective action.”

CTA President Dorval Carter pushed back against the criticism, calling it politically motivated.

“We have made substantial investments in security, including additional police officers and improved lighting at stations,” Carter said. “The federal government’s concerns seem designed to punish Chicago rather than improve transit safety.”

The funding dispute could further complicate the city’s budget picture if the threatened cuts materialize.

What Happens Next

If Johnson vetoes the budget, the council would need 34 votes to override him—a high bar that would require picking up at least four additional votes. That margin is possible but not guaranteed, giving the mayor leverage in any last-minute negotiations.

A sustained veto would throw the city into uncharted territory. Without a budget in place by January 1, city operations could grind to a halt. Employees would not receive paychecks, services would cease, and Chicago’s bond rating could be downgraded.

“No one wants to go over the cliff,” said Alderman Pat Dowell (3rd), chair of the Budget Committee. “I’m hopeful the mayor and the council can find a path forward before it comes to that.”

Johnson’s supporters urged him to stand firm, arguing that a veto would force the council back to the negotiating table.

“The mayor was elected on a platform of making corporations pay their fair share,” said Chicago Teachers Union president Stacy Davis Gates. “He should not abandon that promise now.”

The deadline is December 31. All of Chicago will be watching to see who blinks first.