— Chicago Sun-Times – Opinion | Susana A. Mendoza —

The mayor cannot afford to ignore rating agencies and taxpayers with a “scam,” Illinois State Comptroller Susana Mendoza writes. It’s time for some fiscal discipline.

If City Council members approve an $830 million bond issue this week, Chicago taxpayers can expect to be on the hook long-term for the costs — which will be higher — because of a chronic lack of fiscal discipline and an administration loathe to consider any trims to its budget.

Standard & Poor’s Global became the latest bond rating agency to lower the city’s rating to just above junk status, saying the administration appears unwilling to even consider cutting spending.

The day after that downgrade, to add insult to injury, Mayor Brandon Johnson’s administration offered its plan to borrow $830 million more.

In recent months I have warned that the credit rating agencies are watching and have voiced concern about this administration’s spending.

“The rating action also reflects our view that following the 2025 budget negotiations, the city’s practical options for raising new revenue appear less certain, as does the willingness of city leadership to cut spending, creating a level of uncertainty around its financial trajectory that is more appropriately reflected in the lower rating,” S&P Global said in its report lowering the city’s bond rating from BBB+ to BBB, two levels above junk bond status.

As the state’s chief fiscal and accountability officer, I have worked hard over the past eight years to bring the state’s credit rating back up from where the previous administrations sunk it. I saved state taxpayers $82 million in interest by repaying a $2 billion COVID-19 loan two years early. After 20 years of credit downgrades, the state of Illinois has enjoyed nine straight credit upgrades on my watch.

Finance Committee Vice-Chair Ald. Bill Conway’s analysis of the terms of the repayment schedule made clear that this bond deal gets monumentally worse by the second.

As ill-advised and tone-deaf as it was for the Johnson administration to seek an additional $830 million in bonding less than 24 hours after having its credit downgraded, it would be absolutely reckless to structure it as an interest-only deal that defers principal for the first 20 years, as the Johnson administration reportedly plans. Paying only interest and no principal for the first 20 years would take the cost of the $830 million bond deal to upwards of $2 billion. This shortsighted cash grab is a full scam on taxpayers and needs to be stopped. It would very likely invite another credit downgrade plunging the city into junk territory.

Spell out repayment plan

If that’s not the administration’s plan, they need to spell out for City Council members and taxpayers what their repayment plan is.

As our previous governor brought on nine consecutive downgrades, he said, “Don’t listen to Wall Street,” and his downgrades ultimately cost Illinois taxpayers money. The mayor of Chicago should listen to Wall Street. He doesn’t have to like investors. But he should welcome investment in Chicago and he should heed the warnings from the rating agencies that his profligate spending spooks potential investors.

“The downgrade reflects our view that the 2025 budget leaves intact a sizable structural budgetary imbalance that we expect will make balancing the budget in 2026 and outyears more challenging,” S&P said in its report announcing the downgrade.

Instead of heeding the warnings of the ratings agencies to budget responsibly, the city doubled down, issuing a news release in which Chief Financial Officer Jill Jaworski said, “We do not agree with this rating adjustment.”

While wrong, the administration’s opinion of the downgrade is inconsequential, but the downgrade has real consequences for Chicago taxpayers.

Mr. Mayor, the taxpayers and business owners of Chicago are asking you to be fiscally responsible because they want you to succeed in putting the city on a better financial track where people can afford to live here, pay their taxes and run their businesses here.

Our creditors are not our adversaries. And we lose when we view our stakeholders that way. When I became comptroller, I listened to the ratings agencies. I reached out to them. Listening to their advice costs you nothing and can give you a clue on how to restore investor confidence in Chicago without short-changing taxpayers the way your downgrades will.

Please listen to the taxpayers, the champions of responsible budgeting, and the rating agencies. Find efficiencies in city government. Not everyone who encourages you to budget responsibly is an enemy. We are your constituents.

Meantime, I strongly urge the members of the Chicago City Council to vote “No” on the additional $830 million in borrowing. If Johnson insists on pursuing a path leading Chicago over a fiscal cliff, you should choose to avoid that cliff dive. Chicagoans are counting on you to be the adults in the room and show fiscal discipline. You have the power to stop this, so do it.

Susana A. Mendoza is the Illinois state comptroller, charged with paying the state’s bills. She served 10 years as a state legislator and 5 years as the Chicago city clerk.

SUSANA A. MENDOZA
Illinois state comptroller

View the article: Mendoza, Susana. (2025, February 17). Susana A. Mendoza: City Council, vote no on Mayor Johnson’s $830 million bond issue. Retrieved from www.chicago.suntimes.com.