Chicago elected Brandon Johnson in the mayoral runoff, a progressive who plans to raise taxes on major corporations to boost the city’s revenue.
(Bloomberg) — Chicago elected Brandon Johnson in the mayoral runoff, a progressive who plans to raise taxes on major corporations to boost the city’s revenue.
Johnson, the Cook County commissioner, beat rival Paul Vallas, a former head of Chicago Public Schools who was backed by financial executives and made crime the focus of his campaign, according to the Associated Press. Both are Democrats.
Johnson, 47, garnered support from the influential Chicago Teachers Union, and surprised many when he made it to the runoff, beating incumbent Lori Lightfoot — the first mayor of Chicago to lose a reelection bid since 1983. He appealed to voters in a largely progressive city and gained momentum by linking his opponent to the Republican party and to indicted former President Donald Trump.
“This Trumpian style politics that has instated itself into this campaign is quite disturbing,” Johnson said last week at the last debate before the elections. “These ideas are, of course, surrounding my opponent, so we have to make sure in the city of Chicago that we reject this divisive form of governance.”
His victory comes as Chicago is at a crossroads. The city has been slower to recover from the pandemic than New York, Washington and Los Angeles. It’s also struggled with crime and high-profile corporate departures, including billionaire Ken Griffin’s Citadel and plane maker Boeing Co.
Vallas was backed by executives at hedge fund Citadel and private equity firm Madison Dearborn Partners.
Johnson plans a $4 per employee tax on large companies that have at least half of their operation in Chicago. He is also proposing a $1 or $2 tax per securities-trading contract, a plan that would likely need state approval and is fiercely opposed by the city’s exchange giants CME Group and Cboe.
He also wants to increase revenue by raising taxes on hotels, implementing a levy on airlines that pollute the city’s air and increasing fees on the sale of high-end properties. He pledged, however, to freeze property taxes, which are largely used to plug the city’s pension hole but have been pushing Chicagoans out of the city.
At a campaign event at the City Club of Chicago last week, Johnson touted his ability to bring the city together to solve big issues including crime and pension debt. He also said he planned to bring high-growth businesses to Chicago and added he would need corporations to hire young people as a way to combat crime.
When asked how he reconciled those goals with his plan for corporate taxation, Johnson dodged the question, saying: “What needs to be reconciled? We want a better, stronger, safer Chicago. Everybody wants that. That’s how we reconcile: we do what works.”
“Businesses want investment, consider me the investor-in-chief,” he said.
Lightfoot’s failure to deal with crime cost her reelection.
Johnson was also the only candidate who refused to pledge to restaff the police force. Instead, he said it was time to get smart instead of tough, and focused on a plan to train and promote 200 detectives. He also pledged to deal with crime by focusing on mental health.
Chicago is also facing a fiscal cliff next year as federal relief funds come to an end. Ralph Martire, executive director of the Center for Tax and Budget Accountability, a nonpartisan research organization, estimates the next mayor already starts with a revenue decline of at least $373 million. And that doesn’t include the annual increase in pension contributions, he said.
Plugging the pension hole will require Johnson to boost property taxes, even if he says he doesn’t plan to, Martire said. Otherwise he will have to divert money normally dedicated to services.
“What the property tax levy does for the city of Chicago is cover the vast majority of the pension payment,” he said in an interview last week. “It’s just not good fiscal policy to suggest that you’re not going to rely on enhancing your property tax revenue to cover this.”
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.