Following a heated debate, opponents of Mayor Brandon Johnson’s plan to issue $830 million in bonds to fund various infrastructure projects stalled a final vote on Wednesday over objections to its 30-year repayment schedule.
The City Council was scheduled to give final approval to the mayor’s bond plan, but after more than 30 minutes of debate, Ald. Anthony Beale (9th) and Ald. Ray Lopez (15th) used a parliamentary maneuver to put off that vote until the council’s next meeting.
The $830 million bond issuance would pay for various capital projects, including road and bridge projects, renovations to city buildings, replacing city vehicles, new street lights and traffic signals, replacing lead service lines, and aldermanic “menu” projects in each ward.
The total cost for the mayor’s borrowing plan would be about $2 billion, in part because the city would make only interest payments until 2045, when it would start making principal payments.
The mayor’s bond plan has sparked intense debate over its potential long-term impact on the city’s finances, in particular after recent credit downgrades.
Ald. Bill Conway (34th) said he supports issuing bonds to pay for infrastructure projects in general, he said the payment structure being proposed “jeopardizes our financial future” by putting off any principal payments for 20 years, noting that during the last six years of the 30-year repayment schedule, from 2050 to 2055, the city would be on the hook for a total of $821 million in payments on the bonds.
“Investment is vital, but the proposed debt structure is fiscal insanity, and not normal,” Conway said.
However, Ald. Pat Dowell, who chairs the City Council Finance Committee, said the mayor’s bond plan has been “unfairly ridiculed,” calling it a “run-of-the-mill issuance” of bonds to cover vital infrastructure projects.
“This bond issuance does result in some debt being taken on. However, it does not rise to the catastrophic level that it has been made out to be,” she said.
Dowell also argued that the city can’t afford to delay using its own borrowing power to pay for infrastructure work such as road and bridge repairs at a time when it can’t count on the federal government to help out.
“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 anytime soon. Any delay in the passing of this bond deprives Chicagoans of the infrastructure that they rely upon every day,” she said.
Some aldermen have said the mayor’s office should reduce the size of the borrowing plan, or restructure it to start paying off the principal sooner, especially when the federal government is threatening to reduce funding.
But the mayor’s finance team has said if the borrowing plan is altered to make principal payments sooner, the city would have to increase taxes to pay for it. They also said if the bond issue is reduced, the cost for delaying some infrastructure projects would be higher in the long run.
Ald. Jason Ervin (28th), who chairs the City Council Budget Committee, argued the mayor’s borrowing plan is the only way for the city to finance upcoming infrastructure work without raising taxes to pay off the borrowing plan faster.
“This is not irrational. This is not illogical. The way that this debt is structured again is dealing within the confines that we set forth. Again, we don’t want to raise revenue, but again we still want to have the sidewalks, the streets, the streetscapes, the bridges fixed, all of those things,” Ervin said.
Although it appeared the City Council was set to narrowly pass the mayor’s borrowing plan on Wednesday, Beale and Lopez moved to put off a final vote until the next council meeting.
Beale argued that funding infrastructure projects through the mayor’s borrowing plan isn’t worth it if it puts the city’s overall economy at risk.
“What good is having nice furniture if you haven’t got a house to put it in?” he said.