Chicago needs a sales tax on professional services, a local version of the state-eliminated, 1% grocery tax and a greater share of state income and personal property replacement taxes to close its $1.12 billion budget gap, top mayoral aides said Tuesday.
Chief Financial Officer Jill Jaworski and Budget Director Annette Guzman did not sugarcoat the challenges Chicago faces while talking to a handful of alderpersons at only the second meeting of the City Council’s revenue subcommittee appointed by Mayor Brandon Johnson more than a year ago.
As she did during last year’s hearing, Jaworski said the state sales tax code is “out of date” and needs to be updated by the Illinois General Assembly to “match the reality of how households spend their dollars today.”
“Our current sales tax is regressive, taxing lower-income households higher than those who spend their earnings on activities largely left out of the tax code,” Jaworski said.
Guzman said increasing Chicago’s share of state income taxes, stabilizing the personal property replacement tax and broadening the state sales tax umbrella to professional services could generate “well over $100 million annually” for Chicago.
“At the same time, we must reaffirm the grocery tax before the state’s deadline of Oct. 1. Allowing that tax to lapse in 2026 would cost the corporate fund an estimated $80 million next year alone, further exacerbating our $1 billion-plus gap,”Guzman said. “Nearly 200 other municipalities in Illinois — from Berwyn to Wheaton and beyond — have already voted to extend this grocery tax… If we fail to do the same, we will leave critical services on the chopping block.”
The proposal to expand the state sales tax to professional services has been talked about for decades, and has gone nowhere in Springfield.
That’s apparently why Guzman warned that alderpersons must “think strategically about diversifying and growing local revenue streams” within the city’s control. During last year’s budget stalemate, the city council rejected a property tax of any size.
Pointing to the Chicago Police Department’s $2.1 billion budget, Guzman said, “Roughly one-third of our corporate fund supports the police department and its related pension obligations. Without new revenue, staffing, training and community-based programs could face cuts.”
Ald. Andre Vasquez (40th) said the local grocery tax should have been included in Johnson’s 2025 budget, but “nothing moved.”
“Had it been included in the budget, it might have gotten done in a way that’s going to feel a lot easier than this year,” he said. “Hearing that 200 municipalities that already did it — it’s a bit frustrating. It was a missed opportunity.”
Civic Federation President Joe Ferguson told City Council members, “We should not let a crisis go to waste.”
“The crisis that may put us over the tipping point where we’re no longer speaking from individual-level government interests in competition with each other,” Ferguson said, “is one where Washington puts us in a situation where we actually all have to come together and acknowledge that the structure itself if misaligned and open that conversation.”
