Chicago Tax-Hike Plan Replaced by Debt Deferral, Job Cuts

The Michael Reese Hospital site, once a cornerstone of Chicago’s Olympic dreams, has become a fiscal flashpoint in Mayor Brandon Johnson’s battle to balance the budget.

At the heart of Johnson’s $17.3 billion proposal is a controversial plan to defer $40 million in debt tied to the site until 2026, a move aimed at avoiding a $68.5 million citywide property tax hike but one that has sparked concerns over rising interest costs and long-term financial stability, the Chicago Sun Times reported. Other aspects of the plan include $3.8 million city job cuts and “cost recovery” for large-scale events.

Acquired in 2009 under Mayor Richard Daley for $91 million as part of Chicago’s unsuccessful bid for the 2016 Olympics, the Michael Reese site, at 2929 South Ellis Avenue in Bronzeville, has been a persistent fiscal burden for the city ever since. (It’s now set to be redeveloped by Scott Goodman’s firm Farpoint.)

Johnson’s plan could help cover the city’s $982 million budget shortfall by deferring payments on the debt tied to the Michael Reese site. While this would free up critical funds, it also comes with the added cost of $2 million in interest payments.

The deferral strategy has sparked divided reactions from aldermen. Some, including Johnson’s allies, support the approach as a pragmatic move to avoid a property tax increase during an ongoing affordability crisis. However, critics, such as Alderman Brian Hopkins, argue that the plan only serves to delay the city’s fiscal problems rather than solve them.

The proposed budget also includes personnel cuts. Johnson is proposing a $1 million reduction in his office budget through the elimination of 10 staff positions, alongside an additional $2.8 million in middle-management cuts across city departments.

Other operational efficiencies are expected to save $23.6 million. A cost-recovery plan for large-scale events, such as NASCAR and Lollapalooza, could contribute $10 million to the city’s budget. Smaller neighborhood events would be exempt.

As the City Council approaches the Dec. 31 deadline to pass the budget, Johnson faces an uphill battle to secure the 26 votes needed for approval. Without an agreement, the city risks a government shutdown.

Credit rating agencies have raised concerns over the potential impact of relying on temporary fixes, signaling that Chicago could face a downgrade if the budget relies too heavily on short-term solutions like the debt deferral.