Mayor Brandon Johnson’s $830 million general obligation bond issue to upgrade Chicago’s aging infrastructure stalled in the City Council on Wednesday amid claims the back-loaded repayment schedule is “fiscal insanity.”
Ald. Bill Conway (34th) is so concerned about the size of the borrowing — and a financing structure that saddles Chicago’s taxpayers with $2 billion in added costs —.that he tried and failed to send the matter back to the Finance Committee he co-chairs for additional discussion.
Conway’s motion was tabled, 27 to 23. That narrow margin underscores what former Finance Committee Chair Scott Waguespack (32nd) called a “lack of trust” between the mayor and Council that has become a “hallmark” of Johnson’s administration.
After Conway’s motion failed, Alds. Anthony Beale (9th) and Ray Lopez (15th) used a parliamentary maneuver to delay the bond issue itself. Under that approach, called “defer and publish,” any two alderpersons, without giving a reason, can delay consideration of any item for one meeting.
Johnson quickly scheduled that Council meeting for next Wednesday, Feb. 26.
Before the matter was deferred, however, Conway eviscerated the bond issue’s delayed repayment structure, saying it saddles the city with $2 billion in additional costs and punts to future generations the tough choice between having to cut spending or raise taxes.
The structure calls for the city to make only “capitalized interest” payments — using borrowed money — for the first two years and make interest-only payments until 2045. Annual payments will balloon from $47.6 million in 2028 to $136.9 million in 2050, remaining there until the bonds are fully retired in 2055.
“The proposed debt structure is fiscal insanity and not normal. … This is akin to taking out a mortgage with a two-year grace period where you just watch the interest accumulate and only pay interest on it for another 18 years, at which point you face a … past-due bill that is double what you originally borrowed,” Conway said.
“Such a reckless strategy not only jeopardizes our financial future but also showcases an alarming disregard for the economic realities and rising costs that working families and businesses across Chicago grapple with every day.”
Given how close he came to having to send the bond issue back to the Finance Committee for more hearings, Johnson was asked whether he believes the backloaded financing plan can pass as is or whether he has “more work to do” before next week’s vote.
“The most important thing that people have to know about what we have put forth is this is about responding to the infrastructure needs we have in Chicago,” the mayor said after the Council meeting. “The residents want potholes filled. The residents want to make sure that we’re shoring up our bridges. … I was elected to invest in people, and that is exactly what I’m doing.”
Finance Chair Pat Dowell (3rd) said she “understands the trepidation” about the borrowing, given that the Council rejected any property tax increase in passing the current budget.
But Dowell argued road, sidewalk, bridge and alley improvements bankrolled by the capital borrowing are essential to maintain Chicago’s safety and standard of living — particularly now that the federal funding spigot is about to be cut off, she said.
“Under the Trump administration, the city of Chicago can’t risk pulling back from borrowing and issuing our own bonds to fund desperately needed capital projects because we already know there will be little help and support coming from Washington any time soon,” Dowell said.
“Any delay in the passing of this bond deprives Chicagoans of the infrastructure they rely on every day. With a construction schedule that is already numbered, delaying infrastructure improvements creates a snowball effect of construction delays, leaving aging infrastructure under construction and under adverse conditions.”
Budget Chair Jason Ervin (28th) lashed out at colleagues for putting up legislative roadblocks now when they rubber-stamped far more dubious financial practices by Johnson’s predecessors.
“Where was the conversation when the Skyway was sold? Where was this conversation when the parking meters were sold? But, when it’s time for the South and West Side to see stuff in this bond issue, ‘Oh, let’s pump the brakes,’“ Ervin said.
“For our community and now, we need to pump the brakes? Get the hell out of here. This makes no sense. If we’re in an environment where we do not want to look at revenue and want to keep spending money, the only options that you do have are to structure the debt in a manner that does not raise property taxes but also allows for the assets … to be paid for over the time they’re in use.”
Beale closed the debate by explaining his decision to slow down the $830 million borrowing.
“We’re all for bonding. … But the terms of this bond are ridiculous. The fact that the first payment is not due until a new administration takes [office]. What sense does that make?” Beale said.
“Some of you all have been promised the world to vote for this bond issue. You gonna get all this extra work. I remember hearing the last administration say the same doggone thing. They’re gonna promise the Black community all the work if you vote for my budget. If you don’t vote for it, ain’t gonna get it. Y’all still waiting on that false promise? Or are your streets still crumbling?”