CITY HALL — Alderpeople on Saturday passed the final spending portions of the so-called alternative budget proposal that made its way through City Council despite sharp objections from Mayor Brandon Johnson and his allies.
The overall package avoids implementing a corporate head tax while making a full advanced pension payment, two provisions the group of alderpeople backing the proposal identified as among their top priorities.
The passage of the 2026 budget is a major rebuke of the mayor by the City Council, although Johnson could still issue a veto or attempt to amend it in various ways.
Complicating that decision is a year-end deadline to pass a balanced budget. If the City Council does not do so, Chicago would face an unprecedented government shutdown that could interrupt an array of city services.
To pay for its various changes from the mayor’s original budget plan, the alternative proposal legalizes video gambling machines, increases the shopping bag tax from 10 cents to 15 cents, adds a 1.5 percent tax on retail liquor sales and expands congestion fee zones for rideshares. It also allows for ads to be placed on city-owned bridge houses and light poles.
The plan also calls for a capped increase to a city leasing tax, the sale of city debt, and allowing “augmented reality” licensing on city properties, such as through games like Pokemon Go.
Unlike earlier versions, the alternative budget that passed Saturday does not include a garbage tax hike, nor does it replace a borrowing plan for firefighter backpay or make cuts to Johnson’s proposed expansion of the city’s youth hiring programs.
Proponents on Saturday admitted the proposal could be improved, but that it presented what they believe is the best path forward for the city’s fiscal health.
“It’s not perfect, but it is a good budget, and one that we can work with. And if we keep involved post-2025 and work together as a collective, it’ll be good for the city of Chicago,” Ald. Pat Dowell (3rd) said.
Mayor Brandon Johnson arrives during a City Council meeting on Dec. 19, 2025. Credit: Colin Boyle/Block Club Chicago
Johnson and his budget team have maintained the alternative proposal is deeply unbalanced and could lead to a $163 million deficit next year. The mayor has raised specific concerns over the debt sale stipulation, which he has said is unfeasible and “immoral.”
Still, Johnson has so far stopped short of confirming that he will issue a veto. He previously threatened he would veto any budget that includes a garbage fee hike or a property tax increase.
On Friday, the mayor asked the council to consider a last-minute “compromise” plan that would move forward with the head tax, make the full advanced pension payment and allow a casino to open at Midway Airport in lieu of legalizing video gambling machines citywide.
That proposal was blocked by Johnson’s council opponents and it has not yet been revived.
Progressive alderpeople on Saturday blasted the budget on the council floor, with several saying it would lead to midyear cuts or a potential credit downgrade. That wasn’t enough to stop the appropriations ordinance passing by a 30-18 vote.
“This budget relies on revenue assumptions that are uncertain, unstable and unsustainable,” said Ald. Jessie Fuentes (26th). “It assumes revenue will materialize without sufficient evidence, and it pushes real costs into the future through one-time fixes. That is not responsible budgeting. It’s wishful thinking.”
Below, read about some of the fee increases and other changes included in the budget that passed City Council on Saturday.
Ald. Pat Dowell (3rd) speaks to the press after a City Council meeting on Dec. 19, 2025. Credit: Colin Boyle/Block Club Chicago
Under the alternative budget, Chicago’s tax on single-use checkout bags would rise from 10 cents to 15 cents, with one cent going back to the retailer.
This is the second year in a row the bag tax has been hiked: Johnson’s 2025 budget raised it from 7 to 10 cents.
Chicago’s checkout bag tax was put into place in 2017 and impacts both plastic and paper bags.
Ald. Jessie Fuentes (26th) speaks with Ald. Walter Redmond Burnett (27th) during a City Council meeting on Dec. 19, 2025. Credit: Colin Boyle/Block Club Chicago
Property Tax Hike For Libraries
After promises from alderpeople and Johnson to the contrary, next year’s budget will include a small property tax hike after all.
A last-minute measure sponsored by Ald. Daniel La Spata (1st) and backed by City Council members across the ideological spectrum will raise the property tax levy for the Chicago Public Library by about $9 million to fund currently vacant staff positions and security guard roles that were set to be cut in next year’s budget.
The cost per household will vary, but Ald. Raymond Lopez (15th) said it would amount to about an $11 increase, on average, for homeowners next year.
Alderpeople defended the hike this week as necessary to ensure libraries continue to offer their current services and hours across the city.
“I think the way we restore trust with our residents in government is when they know what their dollar is paying for, and they value what their dollar is paying for,” La Spata said. “And I think you can truly and definitely say that about our libraries.”
The passed budget proposal also maintains the library’s $10 million collections budget, which is used to purchase books and pay for subscriptions and other assets.
Copious cans sit ready to be filled with beer at Spiteful Brewing, 2024 W. Balmoral Ave., in Bowmanville on Feb. 3, 2025. The cans used come from Canada. Credit: Colin Boyle/Block Club Chicago
Retail Liquor Tax
The budget also includes a new flat fee on off-premise liquor and beer sales.
The 1.5 percent tax would affect retail sales of liquor, beer and wine, but not those sold directly to customers drinking at bars or dining at restaurants. The fee was reduced from an earlier 3 percent proposal.
The potential revenue projections tied to the liquor tax is another area of dispute between Johnson’s administration and the alternative council-backed budget.
Alderpeople estimate the change would bring in $6 million next year for the city, but the mayor’s budget team said in a presentation on Wednesday they believe it could actually lead to a loss of more than $4 million.
“By imposing a rate of 1.5 [percent] on off-premise liquor, we will actually see a revenue loss, because that’s less than what our effective tax rate is today,” budget director Annette Guzman said.
Regardless of the dueling projections, the liquor industry remains opposed to any fee increase and has said implementing the change starting in the new year would be overly burdensome on businesses.
“The revised proposal still raises one of the highest alcohol taxes in the nation and asks working families to pay nearly 12 percent in regressive sales taxes amid an affordability crisis,” an umbrella group called the Chicago Alcohol Tax Coalition said in a statement this week.
Activists hold a press conference on Dec. 19, 2025 at City Hall calling on alderpeople to reject a revenue stipulation to sell city debt as part of the 2026 budget. Credit: Colin Boyle/Block Club Chicago
Sale Of City Debt
One of the most controversial additions to the alternative budget has been a proposal to sell city debt to outside collectors, which some alderpeople estimate could bring in about $90 million in revenue next year.
The stipulation doesn’t specify how that debt could be collected, which would be left to the “executive branch” to implement, said Ald. Gilbert Villegas (36th), who noted that Johnson’s original budget already relies on revenue from increased debt collection.
The proposal to actually sell off city debt, however, has been sharply criticized by some alderpeople, activists and Johnson himself.
“Balancing [the budget] off the backs of working people, particularly selling off debt and setting up a situation where working people and poor people are going to be harassed and berated by debt collectors, that is not the right approach,” Johnson said on Thursday.
That point was echoed by a coalition of activists during a City Hall press conference Friday morning, who still urged the City Council to adopt a corporate head tax next year instead of the debt collection scheme.
“We either balance this budget by choosing the fiscally responsible investment from large corporations in Chicago who will pay more taxes, or burden struggling residents — or have a budget crisis in six months,” said Itohan Osaigbovo, an organizer with a group called Chicago Black Voter Project.
Alderpeople backing the alternative budget have disputed that selling debt would have to mean hounding people with high outstanding water bills or other city bills.
“This doesn’t have to be about picking on the little guy. There’s a lot of folks out there that owe us lots of money that can certainly afford to pay, and have chosen not to because our debt collection has been lax,” said Ald. Brendan Reilly (42nd), the Downtown alderperson who is also running for Cook County Board president.
Ald. Matthew O’Shea (19th), Ald. Gilbert Villegas (36th), Ald. Anthony Beale (9th), Ald. Scott Waguespack (32nd) and Ald. Raymond Lopez (15th) gather after a City Council meeting on Dec. 10, 2025. Credit: Colin Boyle/Block Club Chicago
Video Gambling Legalization
Under the alternative budget, video gambling terminals will be legalized at bars and restaurants across the city.
Backers estimate it would bring in $6.8 million in 2026 as operators start paying the necessary license fees, although Ald. Anthony Beale (9th), one of the proposal’s most ardent supporters, said the revenue would be far greater in the years to come.
“Once is up and operational, it could bring us between $65 and $100 million a year. That’s a lot of money. I don’t see Bally’s [casino] bringing that kind of money into the city,” Beale said Saturday, later adding that he believed it would be three to six months before the machines are up and running across the city.
Bally’s is currently operating its temporary casino in River North and working to open the permanent Chicago casino in River West.
Like other portions of the alternate budget proposal, the Johnson administration disagrees the change would bring in the projections Beale and others are expecting.
That’s partially because under previous agreements with the company, the city would lose a $4 million community benefits payment from Bally’s if video gambling machines are legalized, the city’s CFO Jill Jaworski said this week.
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