<p>Mayor Brandon Johnson says the city will refinance up to $525 million in debt to dig itself out of a now $85.1 million budget hole caused by a slew of so-far-fruitless revenue streams passed in the City Council’s spending plan.</p><p>Johnson had repeatedly warned of a $130 million hole in the City Council-crafted budget, but he said Tuesday that deficit has shrunk due to better-than-expected returns in other areas. The debt refinancing will save the city between roughly $65 million to $71 million this year, Johnson said. If needed, the city will also tap into remaining pandemic-era relief funds to help close the gap.</p><p>Johnson says the Council’s revenue plans — including privatized debt collection, selling ad space on city bridges, and selling virtual ads in augmented reality games — have yet to produce the cash promised by a coalition of opposition Council members who took command of the city’s budget process to kill Johnson’s proposed head tax on the city’s largest corporations.</p><p>“Every single proposal that they put forward failed,” Johnson said Tuesday, calling his City Council opposition the “failed corporate caucus.”</p><p>“Had the City Council passed the budget that my administration proposed last year… these resources could have been helping us deliver a better government for our residents. Imagine the differences that these resources could be making,” Johnson said,</p><p>Johnson said that the refinancing and potential use of pandemic relief funds will not require Council approval.</p><p>The group of roughly 30 alderpersons who crafted and supported this year’s budget have repeatedly blamed Johnson for the shortfall. They accuse Johnson’s administration of purposely slow-walking their budget initiatives because he disagrees with them on principle.</p><p>The group, which calls itself the “Budget Accountability Coalition,” has accused Johnson’s team of not following up after initially releasing a “request for information” from any companies interested in carrying out the $2.1 million augmented reality advertising scheme. They’ve also slammed Johnson for being slow to notify the state of the city’s intention to implement video gambling — a $6.8 million proposal that’s still in limbo as the owners of Bally’s Casino <a class="Link" href="https://chicago.suntimes.com/city-hall/2026/08/12/ballys-permanent-casino-river-west-construction-slowdown-council-members-letter" target="_blank" ><u>continue to lobby against it. </u></a></p><p>“The administration opposed the policy, sat on the required state notification for months, and is now watching Bally's lobby to gut it,” the coalition said in a statement last month.</p><p>Johnson’s team has said that the Council’s projections for 2026 were unrealistic because they required new processes, city contracts or other steps to get off the ground.</p><p>Budget officials also warned that the Council’s biggest revenue driver — a plan to sell $89.6 million in city-owned debt to a private collector — wouldn’t pay off because much of the debt is old and unlikely to be collected, making it unattractive to potential debt buyers. Johnson said his team has reached out to more than 20 banks and received only two responses. A preliminary debt sale deal with Bank of America fell through last month.</p><p>Johnson said financial institutions realized that the debt sale wouldn’t come “anywhere close to producing the nearly $90 million in revenue that… the ‘corporate caucus’ projected,” he said. “This was a bad deal for banks, a terrible prospect for working families.”</p><p>New revenue streams from Johnson that made it into the final budget — a tax on social media companies and a tax on online sports betting — are outperforming initial estimates by at least 56% and 69%, respectively, Johnson said Tuesday. Both of those policies are facing a court challenge.</p><p>Another major sticking point between Johnson and the Council involves whether and when the city plans to pay the second installment of a so-called <a class="Link" href="https://chicago.suntimes.com/city-hall/2026/07/16/chicago-city-hall-pension-advance-payment-delay-cfo-steve-mahr" >advanced pension payment</a> — a policy of paying more than what’s required to help boost the city’s severely underfunded pensions.</p><p>Last year, the City Council pressured Johnson to increase the advanced payment to $260 million, on top of the $2.8 billion required by state law, and has tried to push him to make it in full rather than in two installments. The city made the first payment of $130 million in January.</p><p>The mayor told a conference of city investors earlier this month that the city will in fact make the second payment.</p><p>“I want to reassure this audience that the city will make the second budgeted supplemental pension payment this year. It’s a question of when, not if,” he said.</p><p>Johnson heads into the 2027 budget season after a string of <a class="Link" href="https://chicago.suntimes.com/city-hall/2026/08/04/mayor-brandon-johnson-budget-director-leaves-guzman-finances-pensions" >high-power personnel losses</a> on his finance and budget teams. Chief Financial Officer Jill Jaworski left earlier this year, after the intense 2026 budget battle. Her replacement, Steve Mahr, left last month. Budget Director Annette Guzman, who had been a fierce defender of Johnson’s fiscal priorities, announced her departure in early August. Johnson said she left to care for her ailing mother.</p><p>When asked what it will take to see a less contentious 2027 budget season, Johnson said it will require the City Council “to be in agreement with me.”</p>
Mayor Johnson plans to refinance debt to fix $85M budget hole 2026
IUSTITIA.BG – Investigations 2009-2026 2026-08-25 18:32:42
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