Chicago is "diligently preparing" to go to market soon, now that the bond market has mostly recovered from April's turmoil, Chief Financial Officer Jill Jaworski said in a press briefing Friday after the city's annual investor conference.
Among the other takeaways from the briefing: the city's dispute with Chicago Public Schools over a $175 million Municipal Employees' Annuity and Benefit Fund payment remains unresolved. Some City Council members are questioning the amount of tax increment financing surplus that goes to CPS in light of CPS' refusal to shoulder the MEABF payment, Jaworski said.
And Chicago has not yet seen a dip in the amount it's reimbursed by the federal government, but it is bracing for major reductions — not only in certain large grant programs, but also in many of the smaller grant programs that impact Chicago residents.
"We've been clear as an administration that we will not be able to step into the shoes of the federal government if they do not continue the grant programs that they currently have," Jaworski said. "We don't have the capacity for that. But our residents will be affected."
Jaworski said the administration of Mayor Brandon Johnson is committed to "achieving better equity in our taxing system." And she said the conference included "robust discussion" of Bring Chicago Home, the mayor's ill-fated attempt to pass a graduated real estate transfer tax to fund housing for homeless people.
The administration is evaluating different revenue streams, she said.
"It is our goal to by June have determined which ones we think are the most feasible and appropriate, and that meet the administration's goals to pursue going forward," she said. "One of the things that we did talk about was a desire to have more equitable revenue streams."
Jaworski teased a City Council hearing in June to address the recent
"I think it's a challenge, certainly, the situation that we're in, and the City Council made it more challenging for themselves by not passing more revenues last year or pushing too heavily to rely on one-time solutions," she said. "The city was downgraded after that budget passed primarily due to those uses of one-time solutions."
"We are committed to not going to scoop and toss" debt restructuring, Jaworski said at the briefing, adding that she also addressed scoop and toss in remarks on the presentation at the investor conference.
The Johnson administration closed this year's conference to the press, breaking with past practice. One attendee said the administration left a more favorable impression than it did at
"I think the conference itself was helpful," said Howard Cure, partner and director of municipal bond research at Evercore Wealth Management. "Questions still remain, and not all questions or topics were addressed."
There were breakout luncheons on different branches of the city. Cure, who chose the Chicago Public Schools lunch, raised the issue of the district's reliance on TIF money and the city's leverage to withhold it; the enrollment declines and the concurrent rise in employees; and the district's refusal to shut down buildings that are underutilized.
"It's an expensive district to run, with militant unions that are willing to go on strike," he said.
Staffing costs are going to continue to be a source of budgetary pressure on the school district, he said, "and I don't know yet what the impact of having a separate,
Cure said a transit policy presentation by Chicago Transit Authority officials acknowledged the need for a coordinated regional transportation system. But the presentation "really didn't have any specifics," he said. "It left me with questions about how they're going to balance their budget when they have such a decline in passengers."
The
Cure raised concerns about the service cuts that will likely result from an impasse in Springfield.
"It's a real strength of the city to have a comprehensive, strong transportation network, and you don't want to run the risk of having the quality diminish," he said.
The final panel, moderated by Jaworski, featured Johnson, Ward 28 alderman and Budget Committee Chair Jason Ervin and Ward 3 alderwoman and Finance Committee Chair Pat Dowell.
The presence of Ervin and Dowell on the panel reassured investors after the difficulty the mayor had with
"I think (the mayor) wants to give the impression that they're working earlier with the City Council to make sure they have a more smooth process for the next budget," he said.
"They recognize… the structural gap," Cure said of another panel that included Annette Guzman, the city budget director, and John Roberson, the chief operating officer. "The city closed it in the past using one-time relief measures, and you can't keep doing that. They were looking at what kind of revenue options there were… But you need state and local approval" for many of them, including expanding the sales tax to include services.
In a slide deck presented at the investor conference, the Johnson administration noted that 40% of principal has been amortized in 10 years across all the city's property tax- and sales tax-secured bonds.
"In FY 2025, nearly 80% of the city's property and sales tax secured principal and interest will be paid from non-property tax revenue sources, which directly impacts the city's general fund," the presentation noted.
It also said the city plans to maintain high reserves despite 2024's revenue underperformance. And it stressed that the administration's advance pension funding policy is working. As of Dec. 31, 2023, the police pension fund is 24.1% funded, the fire pension fund is 22.8% funded, the MEABF is 25.6% funded and the labor pension fund is 42.6% funded, according to the deck.
