Chicago, Illinois – The city of Chicago is preparing to challenge a recent ruling by Circuit Court Judge Kathleen Burke that struck down a proposal by Mayor Brandon Johnson to increase the real estate transfer tax on high-end property sales. The mayor’s plan aimed to generate $100 million annually in revenue to combat homelessness. Following the judge’s declaration that the binding referendum on the tax increase was invalid, the city swiftly filed a motion requesting a stay on the ruling while it appeals. In its motion, the city argues that there is a substantial case on the merits and criticizes the court’s denial of the city’s petition to intervene in the case. The city asserts that the Chicago Board of Election Commissioners failed to adequately represent its interests and did not present substantive arguments against the industry groups’ claims that the referendum violated state law.
Multiple industry groups, including the Building Owners and Managers Association of Chicago and the Chicagoland Apartment Association, have argued that the ballot question is unconstitutional and violates state law by asking voters to approve both a tax cut and tax hike simultaneously. The lawsuit contends that the referendum measure epitomizes “log-rolling,” a legislative tactic that combines an unpopular proposal with a popular one to garner voter approval. Additionally, the suit alleges that the City Council violated Illinois Supreme Court precedent by failing to provide voters with a detailed explanation of how the $100 million in annual revenue would be spent.
According to the lawsuit, the city’s arguments against the referendum were not raised due to its exclusion from the legal proceeding. The city claims to have a sufficient interest in the matter and asserts its role as a necessary party to the litigation, as the Council has proposed amending its municipal ordinances on transfer tax and requires referendum approval to do so. The city also argues that the court’s injunction hampers its legislative process and infringes on its citizens’ right to vote, which is mandated by law.
The referendum question seeks authorization from voters to quadruple the real estate transfer tax for property transactions valued at $1.5 million and above and triple the tax for sales between $1 million and $1.5 million, while decreasing the tax for homes costing less than $1 million. The proposed three-tiered tax structure is expected to generate an additional $100 million annually to address homelessness. Advocates of the referendum emphasize that the revenue could be used for rental subsidies and mental health care, among other purposes, with specific allocations determined by an advisory board and a yet-to-be-passed spending ordinance. However, the city would not budget the revenue for use until 2026.
Supporters of the referendum, including Mayor Brandon Johnson, argue that a dedicated revenue stream is necessary to confront the escalating homelessness crisis. They estimate that approximately 93% of property sales would receive a tax cut under the proposed change. The city asserts that allowing the advisory referendum to proceed poses no harm, as any enactment would still require approval by the City Council and be subject to the legal challenges raised in the lawsuit.
The Chicago Board of Election Commissioners is scheduled to meet to decide whether to appeal Judge Burke’s ruling. Meanwhile, the written court order provides a degree of clarity regarding the fate of the votes. According to an Election Board spokesperson, Max Bever, early voting and vote by mail will continue, but the judge’s order invalidates the ballot question, meaning that the votes pertaining to the referendum will not be counted unless there is a future court order to the contrary.