Mayor Brandon Johnson Proposes $300M Property Tax Increase In 2025 Budget
Chicago Mayor Brandon Johnson pitched a $300M property tax increase at a city council meeting Wednesday as part of his 2025 budget proposal, another potential knock on a business environment already perceived as unfriendly to commercial real estate.
The proposed tax increase, which would help cover a nearly $1B budget shortfall, is the largest since then-Mayor Rahm Emanuel announced a $318M hike in 2016 to fund major infusions into police and firefighter pensions as part of a multiyear bundle of increases, the Chicago Tribune reported.
It is unclear exactly how much more commercial property owners would pay in taxes since the city hasn't yet released details. But city spokesperson Erin Connelly told the Tribune that all property owners would see an average 4% increase on their bills compared to 2023 values.
“This is tough. It is something that I grappled with for weeks and weeks,” Johnson said at the city council meeting.
“I directed my budget team to look at all the options at closing this budget gap, and it came down to either mass layoffs, curbing vital city services or an increase in property taxes. I would certainly much rather tax the rich, but I did have to make the choice to increase our property taxes.”
During his mayoral campaign, Johnson pledged not to increase property taxes, and he chose not to do so in 2024.
But on Wednesday, he said this tax increase was an ask for families to “lean in yet again and do a little bit more” to ensure neighbors aren't laid off and the city won't have to cut back on vital services.
Concern from the CRE community that the city's tax environment is stifling investment in Chicago was already high before the proposed tax increase.
Chicago CRE professionals ranked property taxes as the city's second-greatest near-term challenge behind safety, according to a midyear sentiment report released last month by the Real Estate Center at DePaul University and the Urban Land Institute's Chicago District Council. Taxes and pensions were the CRE professionals' greatest long-term concerns.
One anonymous survey respondent said taxes were “killing” investment properties and that many investors won't touch Cook County.
“Taxes rarely win popularity contests, and they aren’t a new topic,” Reagan Pratt, the director of the Real Estate Center at DePaul University, said in a release Wednesday. “Thirty years ago, we were complaining about differential assessments on nearly identical projects in DuPage vs. Cook County.”
Johnson will need support from 26 of the 50 aldermen to pass the measure, and 14 of them have already spoken out against the tax increase. In a letter to the mayor Tuesday, those aldermen called the tax increase a “non-starter.”
“We cannot support a budget that includes a property tax increase. Period,” the aldermen wrote, citing a poll stating that 90% of Chicagoans oppose increasing property taxes to raise revenue.
“Of those 90% of residents, 79% strongly oppose raising property taxes,” the aldermen wrote. “This is a non-starter for us and our constituents.”
In another move to help balance the budget, Johnson plans to declare a record $570M surplus from unspent tax increment funds. That money comes from unused or unobligated money from special taxing districts aimed at funding local projects.
By law, Chicago Public Schools will receive about half of the declared TIF surplus, and the city will get about $132M of it, with the rest split between different taxing bodies.
“My administration has spent last year examining every TIF district and worked with our departments to remove projects that are no longer viable while still reserving funding for projects that will benefit our overall city,” Johnson said.
It is unclear which projects the administration deemed no longer viable.
The city's budget must be passed by the end of the year.
