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Mayor Lori Lightfoot moved up her 2022 budget address by a month to coincide with the unveiling of her plan to spend the $1.9 billion avalanche of federal stimulus funds on its way to Chicago.
That’s where much of the action will be during this year’s budget hearings as
aldermen continue to push back against Lightfoot’s plan to use a financial shell game of sorts to get around the U.S. Treasury Department’s ban on using federal COVID-19 relief funds to retire debt.
Now, influential aldermen have gotten a broad strokes, sneak peek at the investments the mayor has planned.
The grand total of new investments is $1.2 billion. That includes $567.6 million in stimulus funds and $660 million from the Lightfoot’s 2022 capital bond issue.
Included on the list:
• $166 million for community development • $157.3 million for affordable housing • $157 million for assistance to families in need • $117 million for homelessness support services. • $104 million for environmental justice/hazard reduction • $100 million for community safety • $93 million for public health priorities • $87 million for small business and workforce support • $84 million for “climate resiliency” • $65 million for youth opportunities • $60.6 million for city infrastructure and parks • $20 million for city promotional campaign • $16 million for arts and culture
Lightfoot originally intended to use more than half of the $1.9 billion in federal relief funds to retire $465 million in scoop-and-toss borrowing and cancel plans to borrow $500 million more.
But when the Treasury Department guideline nixed that idea, the mayor’s financial team devised an end run.
Instead, the mayor plans to use $782 million in relief funds to replace revenues lost to the pandemic in 2020 and 2021. That will free up corporate fund revenues to retire the refinanced debt, often called “scoop and toss” because it scoops up existing debt — and by stretching out the payments — tosses that obligation further into the future.
That’s in addition to Lightfoot’s plan to refinance $1 billion in debt at reduced interest rates during the fourth quarter of this year and use the $250 million in savings to pay for retroactive pay raises for Chicago police officers.
Ald. Sophia King (4th), chairwoman of the City Council’s Progressive Caucus, has already used a council hearing to question the mayor’s financial team on what would happen if the council decides to refinance but “over a number of years.”
That would free up federal money to confront what King views as pressing social needs laid bare by the pandemic.
“There are certain things that if we don’t get to and address right now, could cause longer-term problems that may be financially burdensome,” King said.
“Obviously, you guys are presenting a budget that takes care of the scoop-and-toss first. …Have you looked at and weighed … those options of looking at some of the other really large issues that have come to light over COVID versus paying scoop and toss immediately and different versions of that? Have you weighed the cost of doing that?”
Chief Financial Officer Jennie Huang Bennett told King city officials were trying hard to balance the need to spend more on mental health, affordable housing and anti-violence initiatives with another pressing need: “Repayment of what, in essence, is scoop and toss, which also has very negative ramifications.
“We are working towards a proposal that’ll balance both. Understanding the importance of investments that there are significant needs. But also understanding that we need to find a financially responsible path forward,” she said that day.
When Beetlejuice is out, the city will be filing for bankruptcy. Bet on it. The good news is that US Bankruptcy courts try to preserve the pension obligations.