Politics
Why a Plan to Borrow $830M to Repair Streets, Sidewalks, Bridges Touched Off a Political Firestorm
Video: Joining “Chicago Tonight” to discuss the mayor’s borrowing proposal is Chicago Chief Financial Officer Jill Jaworski. (Produced by Emily Soto)
Just one day after a Wall Street ratings agency issued a public vote of no confidence in Chicago’s finances, Mayor Brandon Johnson asked the City Council to borrow $830 million to repair Chicago’s crumbling streets, sidewalks and bridges.
Although S&P downgraded the city’s credit rating after warning that Chicago faced “a sizable structural budgetary imbalance,” a defiant Johnson called the firm’s analysis inaccurate and his administration moved full speed ahead with plans to add to the city’s already massive amount of debt, estimated at $29.2 billion. The city owes an additional $37.2 billion to its pension funds.
Johnson used his weekly news conference Tuesday morning to urge the City Council to approve the deal, saying the work it would pay for would mean hundreds of jobs for Chicagoans and ensure everyone can move safely through the city.
“We cannot afford more deferred maintenance,” Johnson said when asked by WTTW News Tuesday if the downgrade should have prompted him to delay proposing the borrowing. “It will only cost us more in the long run.”
But despite the full-court press to push the proposal over the finish line by Johnson and his allies, it is unclear whether the proposal to borrow $830 million has the support of at least 26 alderpeople. If it fails, the city will have no clear way to pay to repave roads, fix cracked sidewalks, renovate police and fire stations and replace police cruisers and fire trucks for the foreseeable future.
An up-or-down vote is set for Wednesday, after a week-long delay fueled by outrage whipped up on social media, the budding 2027 race for mayor and the lack of trust many alderpeople have in Johnson’s ability to steer the city through rough financial seas.
Chicago’s Out-of-Whack Finances
Chicago’s finances have been out of whack for decades, pinched by soaring pension costs, spiraling personnel costs and a massive amount of debt.
S&P, one of a handful of major ratings agencies, had urged city officials to demonstrate they were willing to tackle those structural problems head-on by closing a $982.4 million gap in the city’s 2025 budget by raising taxes or cutting spending — or ideally, both.
But the deal on the 2025 budget that squeaked through the City Council did neither, triggering the downgrade in the rating that agencies use to determine how much the city must pay in interest to borrow money, much like an individual’s credit score.
As soon as Johnson proposed it, the borrowing plan touched off a firestorm, sparked by a post from Stuart Loren on X, the social media site formerly known as Twitter.
Loren, a frequent poster who often blasts Johnson and other Chicago progressives, was also the first to post pictures of Ald. Byron Sigcho-Lopez (25th Ward) speaking behind the charred remnants of an American flag at a protest of former President Joe Biden’s policy toward Israel, engulfing the Pilsen alderperson in a controversy that threatened his leadership of the City Council’s Housing Committee.
The post by Loren, the managing director of Fort Sheridan Advisors, a Highland Park-based asset management firm, was amplified by Illinois Comptroller Susana Mendoza, who is widely believed to be considering a run for mayor in 2027.
Mendoza has posted on her personal account about her objections to the proposed borrowing approximately a dozen times using increasingly harsh terms. Just before the City Council’s Finance Committee considered the proposal, she wrote an op-ed in the Chicago Sun-Times blasting the proposal and urging City Council members to reject the deal. A former city clerk, Mendoza said she had personally lobbied alderpeople to vote against it.
Despite the outcry, the Finance Committee sent the proposal to the full City Council for a final vote after a brief debate on Feb. 17. Ald. Pat Dowell (3rd Ward), the chair of the Finance Committee, defended the proposal as fiscally sound and Ald. Jason Ervin (28th Ward), the chair of the Budget Committee, suggested its critics were motivated by an unwillingness to invest in Black communities.
“It seems to me that when we start talking about what we can do in the interest of Black folks in this city, the flags go up,” Ervin said when the proposal reached the full City Council on Feb. 19.
The controversy surrounding the borrowing proposal gained new momentum after the Chicago Tribune reported the ordinance authorizing the borrowing would allow the city to pay only interest for the first 19 years.
If the city does not start paying down the principal until 2045, it would cost Chicago taxpayers $2 billion if the debt is not paid off until 2055, according to projections shared with City Council members.
The city’s finance team could choose to pay off the debt faster, if the city’s financial condition allows, but the ordinance was crafted to offer them as much flexibility as possible to keep the amount the city has to pay annually to stay current on its debt at a manageable level, Chicago CFO Jill Jaworski said.
To pay off the borrowing significantly faster, the City Council would likely have no choice but to hike property taxes to cover the cost of the borrowing, a political nonstarter, Jaworski said.
The city has used a similar structure in the past when incurring what is called general obligation debt, which is backed by the city’s property tax revenue, Jaworski said.
Joseph Ferguson, the head of the Civic Federation, a nonpartisan budget watchdog group, and the city’s former inspector general, said in an op-ed in the Tribune that the city should only borrow the minimum amount it needs to finance critical infrastructure projects and begin making payments on the principal immediately, not just covering the interest.
Ald. Bill Conway (34th Ward), who ran unsuccessfully for Cook County state’s attorney in 2020 and is often touted as a 2027 mayoral candidate, described the borrowing plan during the Feb. 19 City Council meeting as “fiscal insanity and not normal” as well as “downright ludicrous.”
Conway’s effort to send the proposal back to the Finance Committee was rejected by the City Council with a 27-23 vote.
During the debate on Feb. 19, Dowell echoed Jaworski’s description of the borrowing plan as “unfairly ridiculed” and said the firestorm had been driven by those who know nothing about municipal finance as part of a campaign designed to cover up the “disingenuous, political nature of these attacks.”
“The posturing in the public square has become the new determination of fact,” Dowell said. “For those who want to reduce our (Capital Improvement Plan) to attention-grabbing headlines, do so. But do so knowing nothing short of the safety and accessibility of our city is at stake.”
Elected officials typically relish the chance to vote for infrastructure projects, which can serve as visible and tangible evidence of their ability to improve their residents’ — and voters — quality of life.
That can be especially true during election years, when alderpeople running for another four-year term take every opportunity to host a ribbon-cutting or groundbreaking.
Lack of Trust in the Mayor
The debate over the proposed borrowing has also exposed the significant lack of trust between Johnson and some members of the City Council, who accused him without evidence of attempting to borrow more than needed to help the cash-strapped Chicago Public Schools or increase grants to nonprofit organizations.
The bond proposal “has been misconstrued as a piggy bank for the city to use for all kinds of things,” Jaworski said during Johnson’s Tuesday news conference, acknowledging that the administration had agreed to tighten the language of the ordinance to make it clear that the only grants that can be funded with the borrowed money have to be approved by alderpeople as part of the $1.5 million each gets every year to spend as they see fit to fix up roads, sidewalks or other projects designed to spruce up their wards. Those funds are known as “menu money,” since alderpeople get to pick from a list of possible projects to fund.
In an op-ed published in the Chicago Tribune, Dowell said that false narrative had taken root on social media.
“Those who propagate such falsities earned their finance degrees through scrolling on social media and only add to the chaos when they try to promulgate falsehood in the public square as factual discourse,” Dowell wrote.
Loren said on X Dowell was referring to him.
“Despite my many flaws, not sure Alderwoman Dowell should be inferring I’m an idiot,” Loren posted. “For the first time, you have fairly informed (and credentialed) people chiming in on Chicago’s finances because they actually (1) know what they’re talking about and (2) care about the city.”
Follow the Money
Since 2020, the City Council has twice agreed to borrow a total of $3.25 billion to repair Chicago’s infrastructure with nowhere near as much controversy.
As part of the city’s 2021 budget, the City Council agreed to borrow $1.4 billion to fund the first phase of a plan crafted by former Mayor Lori Lightfoot that called for the city to spend $3.7 billion during the next five years to remake the city’s aging infrastructure and “put thousands of Chicagoans back to work” while addressing a “decades-long backlog.”
That plan helped smooth the passage of the city’s 2021 budget, which was ravaged by the economic catastrophe triggered by the COVID-19 pandemic, even after the Chicago Tribune reported that Lightfoot told members of the City Council’s Black Caucus that they should not “come to me for s--- for the next three years” if they did not support the spending plan.
Chicago property owners began paying back that debt in 2022 with a property tax hike of $25.5 million, officials said.
As part of the 2023 budget, the City Council agreed to borrow an additional $1.85 billion to fund the next phase of the city’s infrastructure plan, which Lightfoot branded as “Chicago Works.”
Thirty-two alderpeople voted to approve that borrowing, even after WTTW News reported that it was not clear what projects the first phase of borrowing paid for, or whether some wards benefited more than others.
It is not clear why Johnson did not ask the City Council to approve the next phase of funding for the city’s infrastructure plan as part of the city’s 2025 budget and avoid having to return to the City Council less than a month later and raise the possibility of a second ratings downgrade.
After Johnson replaced Lightfoot, his team published an online database that lists all of the projects funded by the city’s five-year Capital Improvement Plan in keeping with his promises of transparency.
But while the database includes a ward-by-ward breakdown of projects, it is not user-friendly and cannot easily be used to compare the number or value of projects underway on the South and West sides with those on the North Side or downtown.
It also lists funding for projects set to be completed throughout the five-year lifespan of the capital plan, but does not identify which projects are underway, completed or still in the planning process.
Several alderpeople suggested to constituents during the run-up to Wednesday’s vote that such an accounting would be helpful in winning their votes.
Contact Heather Cherone: @HeatherCherone| (773) 569-1863 | [email protected]
