Mayor Brandon Johnson on Tuesday tightened liberal language pertaining to Chicago Public Schools, but refused to shrink his $830 million general obligation bond issue or revise a back-loaded repayment schedule that raises the overall price tag to $2 billion.
“This is not a payday loan,” the mayor told a questioner at his weekly City Hall news conference.
Johnson recalled what a woman told him during a recent televised forum on WTTW.
“She said, ‘Mayor, you need to fix these streets or fix my car. Guess what I’m gonna do? I’m gonna fix the streets. And I know what’s what aldermen want. … Showing up for the people of Chicago is what we’re expected to do.”
Johnson stood his ground on the fundamental elements of the infrastructure borrowing on the eve of a City Council vote that could go either way.
A new poll showing Johnson’s public approval rating in the single digits and editorials clamoring for more substantive changes have only deepened the distrust between the mayor and Council that culminated in a marathon budget showdown.
Johnson’s offer to tighten the language governing bond proceeds earmarked for CPS would rule out use of those funds to make a disputed pension payment for non-teaching school employees or to help pay for a teachers’ contract still being negotiated.
The new language states: “Each grant or loan of authorized funds shall be made only for a capital project located within the city at the direction of the alderman representing the ward in which the capital project is located and more than $75 million of the proceeds of the bonds shall be used for such grants or loans.”
That’s a reference to “menu money” doled out to each ward and spent at Council members’ discretion. Prior bond ordinances always have given Chicago’s 50 alderpersons “flexibility” to use their menu money for projects that are “not streets and sidewalks and other types of CDOT projects that are typical of what they spend,” Chief Financial Officer Jill Jaworski said Tuesday.
“Some of the aldermen do choose to use their money for grants for schools, for parks. That’s been misconstrued as a piggy bank for the city to use for all kinds of things that we have no intention to use,” Jaworski added.
“We’ve been clear that our intent is to use these bonds for capital improvement. So the language changes are to indicate that those funds could only be used for capital and they would be restricted only to the amount of money that is allocated to the aldermanic menu, which is $75 million. And that the balance of it is really for the capital improvement program, as we have stated publicly numerous times.”
Those relatively minor tweaks were not enough to satisfy Finance Committee Vice-Chair Bill Conway (34th), who last week came within four votes of sending the bond issue back to committee for additional debate and a massive rewrite.
On Wednesday, Conway will attempt to substitute his own plan to shrink the bond issue to $508 million — $108 million for the aldermanic menu and $400 million for other capital projects.
The back-loaded repayment plan would be replaced by a something “akin to a standard 30-year home mortgage,” with annual payments maxing out at $34.5 million. Chicago taxpayers would theoretically save $1 billion in financing costs.
“While the mayor’s office has made some changes that are, frankly, non-controversial, they haven’t addressed the biggest problem, which is the irresponsible payment schedule which essentially doubles the size of the loan and burdens taxpayers for another generation,” Conway said.
“What my proposal allows us to do is fund critical infrastructure projects without an irresponsible payment plan that compounds the bad financial decisions that have been made by our predecessors.”
Last week, the bond issue stalled amid warnings about a financing structure that saddles Chicago taxpayers with $2 billion in added costs.
Johnson’s proposal calls for the city to make only interest payments until 2045. Annual debt payments would balloon from $47.6 million in 2028 to $136.9 million in 2050, remaining there untijl the bonds are full retired in 2055.
Asked Tuesday whether he has the votes for his revised plan, Conway said, “It’s gonna be close. I have a handful of colleagues who are not sure. I’m still working” to convince them.
Lakefront Ald. Timmy Knudsen (43rd) is a solid “No” vote.
Knudsen wants to shrink the mayor’s $830 million bond issue by 20% — to $664 million — and eliminate “interest-only” payments to avoid “kicking the can down the road.”
“What I’m hearing from residents is an understanding that we need a municipal bond function, but a deep, deep frustration that we would structure it in a way that would lead to such an out-sized amount of interest being paid over principal,” he said.
Knudsen argued Chicagoans would barely feel the change, since the city never manages to complete the full roster of projects anyway during any given year.
“Projects get delayed … because of community conversation, different projects blocking them from doing the road,” he said.
“Getting rid of that cushion is what I’m trying to do.”