Mayor Brandon Johnson on Tuesday defended the 3% squeeze he is putting on city contractors as construction industry leaders urged their members to refuse the city’s demand to cut their prices on city invoices by that amount.
Leaders of three powerful groups — the Hispanic-American Construction Industry Association, the Illinois Road and Transportation Builders Association and the American Council of Engineering Companies — joined forces in condemning the city’s cost-cutting maneuver.
In a March 14 letter to Chief Procurement Officer Sharla Roberts, the organizations expressed their “shock and dismay” at an after-the-fact ask that would “wipe out” profits, lead to “significant business losses” and potentially jeopardize federal funding to Chicago.
With the Johnson administration trying to bolster minority contracting, asking low bidders to reduce prices in their legally-binding contracts would “lead to significant business losses and a true lack of trust,” the letter states.
“The actions being taken jeopardize millions in federal funding for the city of Chicago,” the letter states, noting that the Federal Highway Administration has “rejected approaches like this” because “unilateral modifications” by the city would be “inconsistent” with federal guidelines.
“We would encourage the city to recognize and utilize longstanding federal law to ensure the continuity of federal funds.”
Jacqueline Gomez, executive director of the Hispanic trade group, said her 350 members already face rising costs for construction materials due to President Donald Trump’s tariffs. They’re also waiting up to six months or more for the city to pay their invoices.
“Particularly for construction, it’s already a low-bid type of environment. To ask for an additional 3% really puts them out,” Gomez told the Sun-Times.
“Instead of uplifting fair contracting practices, they’re undercutting our small businesses. … When they’re asking for a 3% cut, the numbers just don’t work out. They’re essentially putting small businesses out of business with this ask.”
Although her group is urging its 350 members to reject the city’s request, some rightfully fear retaliation, Gomez said.
“What if they say no and, in the future, it’s taken into consideration? … They don’t want to lose future work.”
Asked Tuesday why he’s putting the arm on city contractors, Johnson said it was “very much standard procedure” and his predecessors had made similar requests.
The mayor further noted the 3% cut was no different than cuts imposed on city departments and all 50 Chicago alderpersons.
“We’re asking everyone to look deeper into their budgets to make sure that we’re balancing a budget and we’re not laying people off and cutting services. This has long been a part of our conversation,” the mayor said.
Budget Director Annette Guzman said City Council members were well aware city contractors would be asked to shave their prices by 3% during the marathon budget stalemate .
“When we were working with City Council to close the ’25 budget gap, they challenged us to look for ways to reduce costs — to look for efficiencies within our budgets — without having to raise property taxes or lay off workers,” Guzman said.
“We went back to each of our department heads and asked them, ‘What ideas do you have? What are ways we can cut our costs?’ This is one that Commissioner Roberts brought to the forefront. … We worked this into the budget analysis that we briefed alders on. … This was before them when they voted on the budget.”
Guzman was essentially asked what would happen if the city doesn’t meet its $8.4 million savings target from the cost-cutting maneuver. She said only that top mayoral aides don’t “give lip service to what we put in our budget.”
“If we have an initiative and the City Council is expecting us to meet our budgets, then we’re gonna implement [it] and be held accountable,” she said.
Chicagoland Chamber of Commerce President Jack Lavin branded the cost-cutting move a mistake that could backfire.
“It sends a message to city vendors that there’s lack of certainty and what will you get from that? You’ll get maybe less vendors bidding in the future. They’ll add a premium on because of that uncertainty. Fewer companies will bid. And that will cost the city more in the future,” Lavin said.
“The better thing to do is to embrace a shared sacrifice. Instead of telling them to cut 3%, say ‘How can we work together to change the scope of the contract to get 3% savings?'”