A defiant City Council tried Tuesday to wean Chicago off its historic addiction to debt, setting the stage for a potential fourth veto from Mayor Brandon Johnson.
By a vote of 32 to 15, the City Council agreed to require future borrowing to be approved by a three-fifths vote. That’s 30 votes instead of the current threshold of 26 votes.
But the Council’s support of the reform championed by retiring Ald. Marty Quinn (13th) fell short of the 34 votes that would be required to override a mayoral veto. That means Quinn’s political victory could be short-lived.
“The mayor does have a history of vetoing really good policy. He vetoed the hemp [ban]. He decided to choose dodgy storefronts over the safety of kids, so anything is possible,” Quinn said, acknowledging that 34 votes is “a reach.”
“The policy is solid. Having more eyes around debt is a good thing. Involving more alders in the vote total creates more attendance, which I’ve been after for the last five years.”
Budget Committee Chair Jason Ervin (28th) has argued if 26 votes is “enough to pass any and every” other piece of legislation, it makes no sense to “allow a minority of members to effectively hold everybody hostage.”
Johnson has hinted strongly at another veto, arguing that Chicagoans “need us to move with expediency” to fill potholes, trim trees and repair or rebuild Chicago bridges crumbling due to “negligence over decades.”
But with 40% of Chicago’s operating budget gobbled up by pension and debt payments, Quinn isn’t the only one who has targeted the city’s mountain of debt.
The Civic Committee of the Commercial Club, one of Chicago’s most influential business groups, made debt issuance a focal point of its financial recommendations to the city. In a report released last week, the group recommended city debt “only be issued to pay for capital needs” and that savings generated by debt refinancing be used “over the life of the bond term” and never for “immediate budget relief.”
The committee also recommended that the city “adopt the goal of paying down 25% of debt within five years and 50% within ten years.”
Under Johnson’s stewardship, last year the city borrowed $449.3 million to bankroll large settlements and retroactive pay raises for Chicago firefighters — raises that Council members had been assured would be covered by money already set aside in the city budget.
And just last month, Johnson refinanced up to $525 million in city debt to erase an $85.1 million mid-year shortfall without employee layoffs and vowed to use what’s left of federal pandemic relief funds to help close the gap, if needed.
Those are the kinds of short-term fixes the Council’s 29-member opposition coalition has ruled out in the upcoming budget debate.
“One-time money must not paper over a permanent problem. Borrowing, refinancing, reserves and asset sales have no business underwriting operations,” the group wrote in a letter to the mayor this week.
Even if Johnson uses his fourth veto to block the higher threshold, Quinn said he will have made his point about the danger of borrowing more money and, increasingly, structuring the repayment schedule to postpone the day of reckoning. Last year, the Council almost blocked an $830 million general obligation bond issue that included a back-loaded repayment schedule that raised the overall price tag to $2 billion.
“When you’re pushing debt down the road or you have too much debt, it has an adverse impact on our bond rating and we’re going to have to spend more money for what we borrow,” Quinn said Tuesday.
With the mayoral election less than five months away, Ervin has accused Johnson’s Council opposition of having political motives.
Quinn denied his motives were political, saying the measure is the next logical step toward a truly independent City Council.
“Utilizing a three-fifths vote as opposed to a simple majority allows more voices to be heard and counted,” Quinn said. “This isn’t a new concept. A three-fifths vote is required in the Illinois General Assembly on all debt-related matters. It’s a smart and solid practice that, I believe, the city should also adopt.”
Downtown Ald. Bill Conway (34th), an investment banker who teaches municipal finance at DePaul University, applauded Quinn, calling the debt ceiling ordinance a “great capstone on your legacy.”
“Our debt load is a silent killer on our budget,” Conway said. “This year, we’re going to spend about $2 billion on debt service and that number will increase next year… The risk we are facing going forward is becoming too tied up in paying the interest on the taxpayers’ credit card. It will crowd out our ability to fund parks and schools and roads and police officers and mental health clinics.”