The skyline of the Windy City is shadowed by fiscal uncertainty this week after a historic “alternative budget” was passed by the Chicago City Council. In a 30-18 vote on December 20, 2025, alderpeople moved forward with a $16.6 billion spending plan that fundamentally clashes with Mayor Brandon Johnson’s progressive vision for the city.
The move marks the first time in modern Chicago history that a budget has been drafted and passed by the council without the support of the mayor’s finance team. With a potential government shutdown looming on January 1, the stakes for Chicago taxpayers and businesses have never been higher.
The Battle Over the Corporate Head Tax and Business Electricity Rates
The central point of contention in this year’s budget battle was the corporate head tax, also known as the “Community Safety Surcharge.” Mayor Johnson’s original proposal sought to charge businesses with more than 100 employees a monthly fee of $21 per worker, a move critics labeled a “job killer.”
While the Mayor argued this was necessary to fund youth programs and public safety, the council’s alternative budget successfully eliminated the head tax. Business leaders had warned that such a tax, combined with rising business electricity rates and existing electric energy costs, would drive major employers out of the city.
“It removes any attempt at ‘sharing the burden’ with large businesses, while imposing regressive taxes on everyday Chicagoans,” argued progressive Ald. Jessie Fuentes (26th), highlighting the deep divide within the council.
New Revenue Streams: From Shopping Bags to Video Gambling
To plug the $1.15 billion deficit without the head tax, the alternative budget introduces a patchwork of new fees and taxes targeted at consumers and tech:
- Shopping Bag Tax Increase: The tax on plastic and paper bags will rise from 10 cents to 15 cents.
- Retail Liquor Fee: A new 1.5% tax will be applied to retail liquor sales across the city.
- Video Gambling Legalization: Lifted the long-standing ban on video gambling, allowing slots and poker machines in bars and restaurants with a liquor license.
- The “Cloud Tax” Hike: A significant increase in the personal property lease tax on software licenses and cloud services, raising it from 11% to 15%.
- Congestion Fee Zones: Expansion of the zones where Uber and Lyft riders are charged extra surcharges for downtown travel.
| New Revenue Source | Estimated Annual Impact |
| Cloud Computing Tax (15%) | $415.2 Million |
| Rideshare Congestion Fees | $39.4 Million |
| Retail Liquor Tax (1.5%) | $6.0 Million |
| Video Gambling Licensing | $6.8 Million |
Infrastructure, Maintenance, and Emergency Services
The budget also addresses critical city needs, including $166 million for firefighter backpay and $283 million for police misconduct settlements and infrastructure repairs. For residents, this means continued funding for essential services, though the threat of a veto remains.
If the budget is not finalized by December 31, 2025, the city faces a government shutdown. This would impact everything from trash collection to the availability of a united power electrician near me for municipal repairs. Property owners should also note a small property tax hike specifically designed to support the Chicago Public Library system, a move that bypassed the Mayor’s promise of no property tax increases