The 2026 budget process has been the most tumultuous of my career so far as Alderwoman of the 49th Ward, even surpassing last year's chaotic negotiations and last-minute passage of a budget that I reluctantly supported. This year has struck an even more antagonistic tone among colleagues and the administration, deepening fractures within the City Council. I am disheartened to see us at this point. The current state we find ourselves in is not the fault of any individual. It is a collective responsibility, and I hope we can take the holiday season to get the respite we need to regain our grounding and start fresh in 2026. I remain hopeful that we can put our differences aside in the new year and work together for the common good of Chicagoans.

In an unprecedented move, a group of alders passed an alternative revenue package and management ordinance after rejecting the proposal put forward by Mayor Johnson in October. While I appreciate my colleagues' efforts to put forward an alternative budget proposal for consideration, I could not, in good faith, support it.

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It has been hard to cut through all the noise surrounding the 2026 budget negotiation process.  In short, I have grave concerns that the alternative budget proposal is balanced on the backs of working Chicagoans, relies too heavily on speculative numbers and assumptions, will create a mid-year shortfall, and that the process surrounding the alternative budget proposal lacked transparency and basic principles of good governance. 

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Transparency and Good Governance:

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The Mayor is tasked with presenting City Council with a budget proposal each year. That is introduced during a City Council meeting in the fall, followed by weeks of hearings from each department to ask questions and negotiate changes. This provides the legislative body, the public, and others time to review the budget proposal and weigh in.

The alternative budget proposal put forward by my colleagues went through an abbreviated, fast-tracked process. While I understand that the group spearheading these efforts was up against the clock to avoid a shutdown, I still have concerns that the process was rushed and opaque. This led to a process that didn't grant adequate time for departmental, public, and outside scrutiny.
 

A 75-page substitute ordinance that modified the alternative revenue proposal was not shared with alders, the Office of Budget and Management, the Chief Financial Officer, and the public until just hours before the Committee on Finance convened, where the item was slated for a vote. Even though the group of alders behind the alternative revenue proposal had admitted to modifying it the day before the Committee meeting, they chose not to disclose it to anyone until the vote was scheduled.
 

The revenue ordinance and the budget appropriations are some of the most –if not the most– consequential items alderpeople vote on every year. By denying anyone outside the group access to the substitute ordinance, the group working on the alternative revenue proposal guaranteed that it would not undergo any level of scrutiny before asking for a vote. 

I can’t support a process that I find opaque and rushed. I also cannot accept a process that circumvents scrutiny. Chicagoans deserved better, and I hope this can be a lesson for all in future budget negotiations.

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Hurting Working Class and Low-Income Households: 

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One of the most alarming components of the alternative revenue proposal is a plan to replace Mayor Johnson's proposed head tax with selling off $89 million in outstanding debt. This is from Chicagoans who owe the city for ambulance payments, utility bills, red-light camera tickets, and other traffic tickets.

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Chicagoans are experiencing an affordability crisis. Individuals who purchase healthcare plans through the Affordable Care Act marketplace will see their insurance costs spike in the new year after Republicans in Congress let subsidies keeping healthcare costs down expire, while extending tax cuts to the rich and corporations. This is compounded by ballooning utility costs, cuts to SNAP benefits, and high property tax bills due to the burden of property taxes shifting from businesses to homeowners. 

The alternative budget allows the City to sell outstanding debt to a third-party debt collector for 9¢ on every dollar. These third-party debt collectors are notorious for predatory and aggressive tactics to collect the debt. These tactics risk creating more financial harm to some of Chicago's lowest-income earners who are struggling to make ends meet, potentially forcing them into bankruptcy. It also rolls back the clock on the progress City Council has made on debt reform to allow a path for low-income earners to pay off their debt.

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Over the past four decades, we have seen the largest transfer of wealth from the U.S.'s working middle class to the wealthy, creating historic income gaps. Reaganomics sold the working class on the idea that trickle-down economics and deregulation would benefit everyone.  The opposition to the head tax, funded by lobbyists for billion-dollar companies, repackaged the same talking points to safeguard shareholder profits, stoking fear that it would be a job killer. Yet, according to WBEZ, "analysis of city tax data and publicly available economic data, reviewed by four economic and labor experts, found a lack of evidence that Chicago’s previous head tax, or its repeal, is to blame for job loss or growth in Chicago."

The proposed reinstatement of the head tax has gone through several iterations, with the latest proposal increasing the fee to $33 per employee and raising the employee head-count threshold for eligible businesses. Instead of applying to businesses with 100 or 200 employees, the head tax would now apply to businesses with 500 or more employees, targeting some of the largest corporations in Chicago. In the same WBEZ analysis, it found that the revised head tax would apply to only 1% of all licensed businesses in Chicago and to companies with an average salary of $111,000. Additionally, the Office of Budget and Management made available an analysis of the modified head tax to demonstrate its impact on the top 20 publicly traded companies when combined with the Trump cuts. Google, at the top of the list, would still see $16.8 billion more in net income every year with the revised head tax proposal combined with Trump's tax cuts. The head tax would only apply to 0.0007% of Google's taxable income.

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I can’t support shifting the burden of our budgetary pain from some of our wealthiest corporations to our lowest-income earners, who are struggling to make ends meet. Given the historic profits these businesses have realized from tax cuts, it is only fair to ask that they chip in a little more to fund the government services they also benefit from. 

Video Game Terminals:

One of the more interesting components of the alternative budget proposal is the plan to allow video gaming terminals across the City. On its face, it could create opportunities for businesses to compete with other Illinois municipalities that allow such activity in their city limits. However, the proposal comes with a cost.

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Aside from the moral concerns about the predatory nature of gambling, there are real consequences to allowing this activity in Chicago. When City Council approved the Bally’s contract during the Lightfoot administration to build a casino in Chicago, it agreed to let Bally’s be the only gambling license holder in the City. This means any allowance of video game terminals would be a breach of that contract, resulting in a loss of $4 million annually. Additionally, the City would lose 390 jobs that Bally’s committed to as a part of the casino negotiations. With so much discussion about whether or not the head tax will result in job losses, we have definitive knowledge that the video gaming terminal proposal will do just that. 

Speculative Figures not Backed by Evidentiary Data:

The alternative budget proposal includes several figures based on assumptions and speculation. This puts the City in a precarious position, risking passing an unbalanced budget as is legally required by the state. This also runs the risk that the City will face a mid-year budget shortfall if the proposed figures do not materialize. Our own financial advisors in the Department of Finance and the Office of Budget and Management warn that the alternative budget proposal creates a $163 million gap between revenue and expenditures. This is because many of the proposals in the alternative revenue budget lack supporting evidence for their revenue or efficiency claims. I have a fiduciary responsibility to the City of Chicago to pass a balanced budget, and I am not convinced that the alternative budget proposal is balanced. 

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The alternative budget proposal includes a $6 million estimate for augmented reality (AR) advertising. This was included in the Ernst and Young report as a suggestion for a new revenue stream by allowing AR content (such as Pokémon Go) on city property. While I believe it is a worthwhile exploration to determine whether the proposal is viable, I am skeptical that it will bring in the anticipated $6 million in 2026. This is because the City lacks the regulatory and legal framework to implement this on January 1. We would need to establish licensing requirements, regulations, and procurement processes. It would require further input from multiple departments and the Department of Law before it could go live. Additionally, it is likely that any AR initiatives would result in litigation, as happened when Milwaukee tried to implement this idea. In Milwaukee, a federal judge sided with an AR developer, ruling that requiring permits for apps like Pokémon Go on public property violated the First Amendment. The ruling resulted in the City of Milwaukee having to pay an $83,000 settlement to the plaintiff for attorney fees. 

The alternative budget proposal also speculates that the Department of Environment (DOE) will raise $3 million in revenue by enforcing the Environmental Benchmark Ordinance. I agree that the City should be more aggressive in enforcing our benchmark ordinance to meet the emission-reduction goals outlined in the 2022 Climate Action Plan. However, the energy benchmarking ordinance was not designed to be a steady revenue stream for the city; instead, it aims to change the behavior of our largest buildings to make them more environmentally friendly. Just as our building code enforcement’s primary goal is to bring buildings into compliance, this ordinance operates the same way. The $3 million figure assumes that buildings will choose not to come into compliance and will continue to pay hefty daily fines. Additionally, the City would only be able to fine non-compliant buildings as of June 1 due to the ordinance’s reporting requirement. Given that it is more financially beneficial for building owners to come into compliance with the ordinance and that there is a limited enforcement period in 2026, the City will likely raise only $165,000 in revenue in 2026, well below the estimated $3 million in the alternative budget proposal. 

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One of the larger-ticket items in the alternative budget proposal is $29 million in revenue from advertising on light poles, boat houses, and City vehicles. The City has advertising opportunities that could generate additional revenue. However, I believe that the $29 million estimate is inflated. I also believe the City underestimated how much revenue this proposal could generate, projecting just $4.6 million for light pole advertising. By the City’s own admission, they were able to bring in $200,000 in revenue in 2014 by wrapping two garbage trucks with ads. Yet, in their presentation, they estimated that advertising on city vehicles wouldn’t generate any revenue. 

Management Ordinance Changes:

There were many on-the-floor amendments to the Management Ordinance during the Committee on Budget. The Management Ordinance is passed every year with the budget and makes various updates to our municipal code. It can be used to create guardrails for specific initiatives, implement new regulations, and shift enforcement duties (such as transitioning environmental enforcement to the Department of Environment). At the 11th hour during the Committee on Budget meeting on December 17, the group of alders who worked on the alternative revenue stream introduced several concerning amendments. 

The first was adding additional oversight to infrastructure expenditures. The amendment requires all Capital Improvement Projects (CIP) receive City Council approval. This means that critical infrastructure projects, such as street resurfacing and sewer line replacements, will require a vote in the Committee on Economic, Capital Technology Development. This will delay addressing routine infrastructure work. 

During the same meeting, the same group stripped the Management Ordinance of provisions that required additional City Council oversight. The first was eliminating transparency requirements on speed camera revenue. Specifically, where speed camera revenue is collected and how it is spent. The second was eliminating a provision that would have required the Chicago Police Department to come before City Council to increase its overtime spending if it exceeded its allocated line item. There have been many concerns raised about police overtime spending surpassing its allotted budget by hundreds of millions of dollars each year. With CPD accounting for 60% of our corporate funds, I do not think it’s an unfair ask to try to rein in costs where we can, without impacting the number of sworn officers.

Using Debt to Pay for Operating Costs:

The group of alderpeople who put forward the alternative revenue proposal did not change the Mayor’s bond ordinance. Bonds are how the City borrows money to pay for capital improvements, such as street resurfacing and bridge repairs. This is a standard practice for municipalities, and is routine for the City. However, this year’s borrowing costs included operating costs for firefighter backpay and police misconduct lawsuit settlements. This is fiscally irresponsible and puts future generations in the position of paying hundreds of millions more in accrued interest.

Credit Ratings:

Before any alternative budget proposal was passed, S&P was already warning of a negative financial outlook for the City of Chicago. S&P warned that the original budget proposal relied too heavily on one-time revenue sources and didn’t implement enough structural changes to create sustainable revenue streams. The alternative budget proposal eliminated one of the proposed structural revenue streams, the head tax, and instead replaced it with a one-time revenue resource of selling uncollected debt. This, combined with a budget that might create a shortfall mid-2026, City Council increases the likelihood that we will be downgraded, which will increase costs for future borrowing. 

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Conclusion:

City Council has made strides toward greater independence this past term. An independent legislative body is critical for appropriate checks and balances and is a cornerstone of our democracy. However, I worry that the passed alternative budget will further erode public trust in government at a time when it is already tenuous. While I am glad that we avoided a government shutdown, I fear that the alternative budget relies too heavily on speculation and unverifiable information. I believe that an independent City Council also means doing our due diligence to ensure that what we pass is accurate and viable. I, unfortunately, cannot come to that conclusion with this budget proposal, which is why I ultimately had to vote no. 

I said this at the top of my newsletter, and I think it bears repeating to wrap it up: I hope members of City Council can take the holiday season to get the respite we need to regain our grounding and start fresh in 2026. I remain hopeful that we can put our differences aside in the new year and work together for the common good of Chicagoans. 

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In Solidarity,
Alderwoman Maria Hadden