Chicago’s budget gap could grow even bigger thanks to a tax flap in Springfield that is expected to set the city back another $40 million in revenue next year.
Following an amendment this week on the prepaid cellphone tax during the Illinois General Assembly’s veto session, Mayor Brandon Johnson’s budget headache seems likely to worsen as he tries to get the City Council to agree to a proposal to balance the 2025 spending package, several aldermen told the Tribune.
Johnson administration lobbyists told aldermen the change, which was most recently updated in both chambers of the General Assembly this Wednesday, will cost Chicago about $40 million in 2025.
“It is extremely frustrating,” Ald. Ruth Cruz, 30th, said. “With this happening now, it means there is not a balanced budget.”
A change creating a distinction between taxes on prepaid phone services attached to a tangible item such as a calling card, phone and those on other prepaid phone plans had been set to go into effect Jan. 1. But state legislators delayed the start date, which the state Department of Revenue said was necessary to account for issues with implementation.
The phone tax issue is just one part of the dilemma for Johnson amid an already uphill budget process that’s seen him and the City Council butting heads over how to plug a nearly $1 billion budget gap for 2025. The bill now sits at Gov. JB Pritzker’s desk for approval.
Several aldermen told the Tribune state representatives will try to secure the funding Chicago expected with more legislative changes early next year.
Johnson’s administration did not respond to questions about the budget blow Thursday.
The mayor’s plan to balance a $17.3 billion budget has faced a series of hurdles, including delays to the timetable that push the final vote closer and closer to the required Dec. 31 deadline to finalize the spending plan. Last week, aldermen flexed their muscle when they voted 50-0 to shoot down his proposed $300 million property tax hike. The mayor has since lowered the number to $150 million, though some notable allies are still rejecting it.
Along the way, Johnson has implored his state government counterparts to step up and help him shore up so-called progressive revenue to combat the city’s structural deficit. But City Hall-Springfield relations, ever a delicate dance, have been strained throughout his tenure as he’s made little inroads with advocating for his agenda there.
To that end, aldermen on Thursday already began pointing the finger at how the Johnson administration has handled its intergovernmental affairs office, which is tasked with lobbying not only the City Council but also Springfield and other levels of government.
That office has seen remarkable turnover, with two leaders and one interim head departing in the past year and a half, on top of several vacancies. Johnson’s deputy IGA director who handles state government, Mike Ciaccio, also recently tendered his resignation, effective at the end of this month.
“It highlights the city’s futility when it comes to a Springfield presence,” Ald. Brian Hopkins, 2nd, said. “We really have no effective Springfield lobbying team, and that really shows up in moments like this. This is inexcusable.”
Cruz said she wants to hear from state senators why they made the change.
“Everybody deserves to know what happened,” she said. “I want to know who voted for this.”
Rob Karr, president and CEO of Illinois Retail Merchants Association, a lobbying group that includes cellphone stores, applauded the update to the tax Thursday.
“IRMA did not kill the mayor’s proposed telecom tax increase, but we would be happy to take credit for protecting low-income users,” Karr said in a statement. “The city is not meaningfully nor consistently engaged in Springfield. IRMA remains ready to offer assistance on issues where we align — as we have always done with previous administrations — but prior to today, we have not seen a clear effort from the mayor’s office to do so.”
The Springfield fall veto session was expected to wrap up Thursday. This week, representatives from Johnson’s administration, including chief of staff Cristina Pacione-Zayas, were spotted at the statehouse during session.
Sen. Celina Villanueva of Chicago, who chairs the Revenue Committee, on Thursday said she didn’t know any dollar amount effect on the city of Chicago from revenue legislation passed this week and directed questions to the city, governor’s office and state agencies.
The committee’s vice chair, Sen. Robert Martwick of Chicago, said after the bill was passed he couldn’t say for sure whether it would have a negative impact on Chicago’s revenue, but if it did, “without a doubt that’s something that we’ll have to look into amending.”
“That’s definitely something we have to look into, because Chicago is not in a position — we should not be stealing from Chicago to bolster our revenues here at the state,” Martwick said.
He also noted that no one with the city vocally opposed the revenue “clean-up” legislation at the Senate Revenue Committee hearing on it earlier this week. A lobbyist with the city of Chicago filed a witness slip in opposition to the bill but did not speak at the hearing.
Chicago Tribune’s Alice Yin contributed.
