CHICAGO MAYOR LOSING GRIP ON CITY AS RIVALS BUILD WAR CHEST

(Bloomberg) -- He failed on his campaign promises to tax the rich. Then city council members passed a budget without his blessing. Now his opponents are building a war chest that could be used to unseat him next year.

Chicago Mayor Brandon Johnson is struggling to keep a grip on the third-largest US city and get its strained finances back on track, opening the door for a roster of potential candidates to take his spot in 2027.

“He’s in real trouble — in terms of his reelection certainly,” said William Galston, a senior fellow in governance studies at Brookings in Washington, DC, who was also an adviser to President Bill Clinton. “His proposals to close short-term revenue shortfalls with higher taxes proved to be wildly unpopular.”

Johnson’s spokesperson pushed back against criticism of his leadership, saying Chicago’s economy remains strong and that the mayor is focused on ensuring the city’s prosperity is shared more equitably.

The first-time mayor, a progressive Democrat that was once a union organizer, was staring down a deficit of about $1.2 billion for this year. His plan to levy a tax on large corporations, which would raise roughly $80 million to $100 million, failed to garner support from city council. 

Tensions got so deep that a group of aldermen passed their own budget against Johnson’s wishes. That was the first time in modern history that a Chicago mayor didn’t find a compromise and sign the city’s budget. Johnson is now bracing for possible layoffs, warning that the projected revenue could fall short.

To make matters worse, the city’s top finance boss, Jill Jaworski, announced she is leaving — a role that may not be easy to replace with little more than a year to go before the next elections. At a press conference last week, Johnson stopped short of committing to run again, saying he is focused on his current job.

“City council effectively made its own budget and forced it upon the mayor,” said Justin Marlowe, director of the Center for Municipal Finance at the University of Chicago’s Harris School of Public Policy. “We really can’t overstate what a fundamental shift in the power dynamic this budget represents.”

A spokesperson for Johnson said the council’s budget was 98% of what the mayor had proposed. He added that the city has “many qualified municipal finance experts who can continue the work that the CFO has done to get the city on stronger financial footing.”

Potential Candidates

Chicago’s troubles have prompted speculation about possible challengers in 2027, with at least five names being cited as potential candidates. Those include Illinois Secretary of State Alexi Giannoulias, who has raised almost $1 million in the fourth quarter for his reelection — money that can be shifted to a mayoral race. Illinois Governor JB Pritzker’s campaign donated to Giannoulias.

Illinois Representative Mike Quigley, a Democrat, has said he will run, as has Cook County Treasurer Maria Pappas. State Comptroller Susana Mendoza, who had nearly $1.5 million in cash on hand at the end of the third quarter, has been cited as eyeing the mayoral spot. They are all Democrats. Tech executive Liam Stanton is also considering a run.

Johnson, once a little-known social studies teacher turned Cook County commissioner, surprised pundits when he came to power about three years ago, promising to turn Chicago’s fortunes around by taxing the wealthy and investing in underserved communities. He beat incumbent Lori Lightfoot, the first Chicago mayor to lose a reelection bid since 1983.

He initially capitalized on a successful campaign with some early wins — he passed a law guaranteeing 10 days of paid leave for more than a million workers and struck a deal to phase out sub-minimum wage for tipped workers, moves that angered a number of business leaders. He also backed another increase of the tax levied on things like cloud computing, generating revenues.

But momentum was short-lived. Voters rejected his proposal to increase taxes on sales of homes of $1 million or more. Pritzker, a Democrat, opposed Johnson’s plans to implement a financial transaction levy, adding that big exchanges powering the trillion-dollar derivatives market would leave Chicago. 

A spokesperson for Johnson said the financial transaction tax was floated during the campaign and that the mayor decided not to pursue it more than two years ago.

Prior to Johnson’s term, the city lost big businesses including Citadel, Boeing Co. and the local offices of Tyson Foods Inc. Concerns that more companies would move were behind the council’s rejection of the so-called head tax, a per employee levy on big corporations once dubbed a “job killer” by former Mayor Rahm Emanuel.

“Chicago isn’t Silicon Valley, it needs to attract businesses,” said David Schleicher, a professor of property and urban law at the Yale Law School. “They can’t tax them endlessly.”

Chicago Crime

Johnson scored a major win on crime, with the number of murders last year falling to the lowest since 1965. Still, his approval rating was just 26% around mid-2025, according to one poll. Another published in October showed 31% approving of the mayor’s job. A spokesperson for Johnson said the polls were inaccurate.

“I’m committed to doing the work that’s necessary to build the safest, most affordable big city in America,” Johnson said last week, adding he was focused on “driving down violence and building more affordable homes.”

Chicago’s financial troubles didn’t start with the current mayor. They are a result of years of revenue falling short of spending as pension, labor and material costs rose. The city is expected to spend about 50% of its 2025 revenue paying down long-term debt and pension contributions.

“The city’s problems always get blamed on whomever is sitting in the mayor’s office at the time, but they really are quite long-term and structural,” said Ralph Martire, executive director at the Center for Tax and Budget Accountability who was part of Johnson’s budget task force.

Chicago’s credit trajectory, which had seen an upswing in recent years, has turned downward again. Under Lightfoot, the city shed its one junk rating from Moody’s Ratings, with advanced pension payments the key to the upgrade. Fitch Ratings also upgraded the city in July 2024, under Johnson.

But last week S&P Global Ratings warned that the budget passed by city council “leaves credible questions around the city’s positioning for a fiscal 2027 that may prove every bit as challenging as the past two years.”

Credit Ratings

Chicago’s preliminary estimates point to a deficit of more than $1 billion in 2027 as well. For now, S&P kept the city’s rating unchanged. The agency dropped the city’s outlook to negative in November after cutting its rating one-notch a year ago. 

Joe Ferguson, president of the Civic Federation, a fiscal watchdog, said a single downgrade is still possible. 

“The administration has to be held responsible for the failure to meet the problems that they inherited,” he said. “We are so close to the edge that the job right now is to lean in. That’s what it means to be a mayor of Chicago.”

Quigley said Chicago is a city in crisis as he announced his run for mayor last week, according to the Chicago Sun-Times. 

“This is a mayor who’s frankly been afraid to lead,” he told the newspaper. “Our toughest choices are our fiscal ones.”

(Updates with Pritzker’s campaign donation to Giannoulias in tenth paragraph.)

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2026-01-11T15:41:24Z