Mayor Brandon Johnson was urged Monday to shrink the size of his $830 million bond issue, revise the back-loaded repayment schedule and strike liberal language pertaining to funding earmarked for the Chicago Public Schools.
Two days before a City Council showdown on the infrastructure borrowing, Civic Federation President Joe Ferguson warned that major changes are needed, not only to lock in the 26 votes needed for passage but also to prevent some of the borrowed money from being used to bail out CPS.
A close reading of “language related to possible education use” in Johnson’s ordinance shows “restrictions” included in past general obligation bond issues “have been removed,” Ferguson said.
“This opens the door to a broader use, including a use not necessarily for infrastructure,” Ferguson said.
“At a time of constrained financial resources, there absolutely should be no uses for anything other than infrastructure. Any open doors need to be sealed shut. … And they really should be tailored narrowly to the investments that we actually need right now.”
Northwest Side Ald. Samantha Nugent (39th) urged Johnson to strike language she fears could open the door for CPS to use the money to cover a $175 million pension payment for non-teaching school employees. The city had bankrolled that payment until former Mayor Lori Lightfoot off-loaded it to CPS.
For months, Johnson has pressured CPS to take out a $300 million short-term, high-interest loan to cover the pension payment. Schools CEO Pedro Martinez refused, prompting the partially-elected Board of Education to fire him, an ouster Martinez now is fighting in court.
“I just want to clarify that these funds can only be used for infrastructure related to nonprofits and schools in our wards and not loans or debt. If we clarify the language, it doesn’t leave room for ambiguity,” Nugent said.
Finance Committee Chair Pat Dowell (3rd) maintained the CPS language is “standard” for all bond issues.
“There’s nothing in the ordinance that gives the city the ability to pay for pensions. This is an infrastructure general obligation bond,” Dowell said.
Ald. Nick Sposato (38th) said the bond issue should be “cut in half” to prioritize the most critical infrastructure projects. He also has had several conversations about the open-ended CPS language with Chief Financial Officer Jill Jaworski.
“She said they would ‘gladly take it out but your colleagues want it in there.’ She didn’t tell me who wants it in there. But she said this is only in there because your colleagues want this in there,” Sposato quoted Jaworski as saying.
“I don’t know what people are thinking. With the dire straits that we’re in, why are we financing stuff for CPS when they’re their own taxing body?”
Last week, two of the mayor’s most outspoken Council critics used a parliamentary maneuver to stall the $830 million bond issue amid warnings its financing structure saddles Chicago taxpayers with $2 billion in added costs. Ald. Bill Conway (34th) called it “fiscal insanity.”
As structured, the city would make only “capitalized interest payments” — using borrowed money — for the first two years and make interest-only payments until 2045. Annual payments on the debt will balloon from $47.6 million in 2028 to $136.9 million in 2050, remaining there until the bonds are retired in 2055.
Conway tried to return the matter to the Finance Committee he vice-chairs for additional discussion, but fell short on a 27-23 vote. A weekend head count by Sposato and Nugent also showed 27 votes for the bond issue.
That could change, depending on Tuesday’s closed-door meeting Sposato helped arrange between Jaworski, Transportation Commissioner Tom Carney and a handful of fence-sitting alderpersons.
Jaworski could not be reached for comment.
Senior mayoral adviser Jason Lee acknowledged Wednesday’s showdown vote could be another nail-biter for a mayor who has already cast two tie-breaking Council votes and been forced to settle for his second choice as Zoning Committee chair.
“There’s tight and there’s not passing. Those are two different things. Tight is fine,” Lee told the Sun-Times.
Lee was asked whether Johnson was prepared to shrink the borrowing, alter or shorten the repayment structure or revise the language impacting CPS. He said only that there are “conversations being had with different aldermen” about “parameters of the investments being made so they can better understand how it impacts their residents.”
That’s not good enough for Ferguson at a time of “fiscal constraint.”
“You focus on the necessary. You do not take on any more burden than is needed to maintain core infrastructure,” he said.
“Of course, everybody wants more. But this isn’t the moment for more — especially if it involves terms that … raise the cost for everybody both now and in the future.”
Dowell countered Chicago “can’t afford to skip out” on infrastructure projects on Johnson’s list.
“For some of those projects, we need money to leverage other funding from the federal government or the state government. Some … are emergency projects where we deferred maintenance,” she said.
“I trust that CDOT has scrubbed the list and what’s on the list are … infrastructure improvements that we need to make,” Dowell added. “I don’t support cutting the size of the bond.”