Chicago Mayor Brandon Johnson is counting on tourists and residents spending more to have fun, take ride shares and stay in hotels to help plug a half-billion-dollar deficit in next year’s budget.

Johnson’s $16.6 billion spending plan, unveiled earlier this week, includes $187 million more in revenue than projected as recently as last month thanks largely to rising tourism and recreation dollars that include hotels, boating, liquor and cannabis.

“A lot of economic data has come in since that time that gives us a lot of confidence in those particular key taxes,” Annette Guzman, the city’s budget director, said after Johnson released the spending plan. “There’s a lot of stuff that’s going to be happening next year, so we have a lot of large events coming.”

Chicago will welcome NASCAR’s street race as well as the Lollapolooza music festival. McCormick Place, the city’s main convention center, will bustle with an auto show in February, the Democratic National Convention in August and a massive manufacturing trade show in September.

More Revenue

The first-term progressive mayor is anticipating more money from recreation and business taxes that come from mooring of boats, cannabis, off-track betting, and liquor, cigarette and e-cigarette purchases. Revenue from recreation is projected to increase 8% to $344.3 million. Business taxes, which are mostly made up of levies on hotels, are estimated to jump 21%.

Johnson acknowledged Wednesday that “everybody knows we are going to need more revenue.”

He’ll need the money to reopen mental health clinics, reduce crime, and chip away at a $35 billion pension burden. He is keeping a campaign promise to forgo — this year at least — an annual property tax increase attached to inflation that his predecessor Lori Lightfoot had implemented. He also didn’t include new taxes on the rich or corporations but said a new city council revenue subcommittee will explore ideas.

Johnson chose not to pursue a higher hotel tax, which will help the city’s convention center industry, said Michael Jacobson, chief executive officer of the Illinois Hotel & Lodging Association.

McCormick Place hosted 104 events in the first half of the year, one more than in all of 2022, according to external spokeswoman Cynthia McCafferty.

Convention planners play close attention to any increases in hotel taxes and the industry still hasn’t reached pre-pandemic occupancy levels, Jacobson said.

Hotels reached about 7 million room nights through August, up 13% from a year earlier and showed a 90% recovery compared to 2019, according to Choose Chicago, a marketing organization for the city. Hotel revenue and taxes during that time have risen about 15% to top pre-pandemic levels.

‘Economic Pressures’

Still, broader economic concerns could put revenue from leisure or business spending at risk. Fitch Ratings, which has a BBB rating on the city’s debt, currently projects “slowed overall economic growth and a shallow economic downturn in the coming months.”

“Reaching Chicago’s revenue projections could be a challenge in light of additional spending or economic pressures that could develop over the year,” Ashlee Gabrysch, a Fitch director, said in an email.

Those include larger-than-budgeted costs for the migrant crisis. Johnson’s forecast reduced the amount earmarked for migrants to about $150 million from a previous projection of $200 million. His administration is counting on expanded worker permits and additional federal and state aid.

“Whether or not those forecasts come true is not really a knock on their budget team but speaks to the volatility we are seeing in the economy and the unknowns we may or may not face in the coming year,” said Dora Lee, director of research for Belle Haven Investments.

The city council will hold hearings on the proposal and is expected to vote on the spending plan by the end of this year.