Mayor Brandon Johnson announced a $16.6 billion budget plan for 2026 on Thursday, relying on a number of new or increased taxes on corporations to close a $1.2 billion shortfall while protecting the city from funding cuts by the Trump administration.

"We are asking large corporations and big tech companies that have made trillions of dollars to pitch in a little bit more," Johnson said.

If Johnson's budget plan is approved, social media companies could find themselves on the hook for a new tax next year. Chicago would be the first city to impose such a tax, and it's just one of a few ideas the mayor claims will balance the budget without federal funding Chicago has grown used to.

"The Protecting Chicago Budget protects Chicagoans from Trump's cuts and his attacks on our city," Johnson said.

The mayor's budget plan takes aim at a $1.2 billion budget shortfall and the Trump administration.

"Our budget proposal asks the large corporations and the ultra-wealthy to chip in a little bit more, so that working families are not burdened with higher property taxes or grocery taxes or garbage fees," Johnson said.

The mayor is proposing a first-of-its-kind "social media amusement tax" that would raise an estimated $31 million by taxing social media companies 50 cents per active user over 100,000 in Chicago. The revenue from that tax would be dedicated to funding the city's mental health clinics and mental health crisis response program.

"We have to do things differently. We can't keep doing the same thing and being in a budget hole. Social media companies are getting some of the biggest tax breaks, and they're having a huge impact. They take, and they take, and they take. They're not paying local taxes. They're not contributing to the city of Chicago. Why shouldn't they help contribute?" said Ald. Maria Hadden (49th).

Other City Council members raised concerns that the social media tax might not hold up in court if challenged by companies like Meta or X.

"I suspect there's a reason no other municipality would do it, despite it would be very popular. It's just I suspect there's going to be some significant legal issues with that one," Ald. Bill Conway (34th) said.

The largest tax hike in Johnson's budget would increase the personal property lease transaction tax, the tax on cloud computing companies including Microsoft and Amazon, to generate $333.2 million. The mayor said the additional funds would help pay for services that were previously relying on COVID relief funding from the federal government.

"That is how we protect these funds from federal clawbacks and grant terminations," Johnson said.

The mayor also hopes to use a record-breaking $1 billion surplus from the city's tax increment financing districts, or TIFs, nearly double last year's record of $570 million. That surplus would provide $232.6 million for the city, while Chicago Public Schools would get $522 million, and nearly $19 million would go to the Chicago Public Library.

Some City Council members were leery about the mayor's financial projections for the TIF surplus.

"Having not yet seen a TIF waterfall, it has hard to see how a billion-dollar TIF surplus is even possible," Conway said.

Most aldermen were cautiously optimistic about the plan as they begin to review its details. Many of their wards rely on TIF dollars to pay for redevelopment projects. 

While aldermen rely on TIF funds for economic development projects in their wards, 26 City Council members this summer signed a letter vowing to back a TIF surplus to help CPS reimburse City Hall for a $175 million pension payment covering non-teacher employees and to avoid taking out a high-interest loan to help balance the school district's budget.

Johnson also is pushing for a "community safety surcharge" that would essentially revive a per-employee head tax on large businesses. The mayor's office said tax would be $21 per employee per month for companies with 100 or more employees, although it would exempt 97% of such businesses, and apply only to 3% of large corporations.

The mayor's budget team estimates that tax would raise $100 million for the city's coffers.

Under former Mayor Rahm Emanuel, the City Council eliminated the city's original head tax in 2014, after Emanuel argued it was a job killer that punished businesses for creating more jobs.

Johnson also is proposing a new "yacht tax" that significantly increases the rate for boat mooring at Chicago's harbors to bring in an additional $4.1 million a year.

The mayor's office said the budget plan also will cut $200 million in existing costs by continuing an existing targeted hiring freeze – which exempts public safety jobs and positions in revenue collection – as well as consolidating office space, selling vacant city land, reducing police overtime spending, and increasing cost recovery efforts for large special events. The budget plan would set a cap on police overtime that could only be increased if the City Council voted to approve an additional appropriation.

The City Council's Progressive Caucus sounded a cautiously optimistic note about the mayor's budget plan.

"Property tax increases alone aren't going to help us keep up with the rising cost of the continued services that we know our constituents want," Hadden said.

City Council members will spend the next month poring over the mayor's budget plan in a series of departmental budget hearings at City Hall, where they'll question the mayor's budget team and individual agencies about the spending plan before possibly offering amendments to Johnson's budget.

A final budget vote could come as early as next month, depending on how quickly Johnson can get the 26 votes he needs to approve his budget.