For a fellow who hasn’t a dime to his name, a brain in his cranium, and a favorability rating in the bowels of Chicago’s sewer system, Mayor Brandon Johnson acts like he’s got Elon Musk’s checkbook.
I don’t know if I can even lay this tangled mess out for you in one post, but I just wanted you to see how deep in the hole Chicago is, and the mayor, along with his Chicago Teachers’ Union (CTU)overlords, both have muck-covered shovels still in their hands.
The union tool’s ploy to have his hand-picked school board fire the Chicago Public Schools (CPS) chief – Pedro Martinez – backfired on him in December. It turns out bear-of-little-brains Johnson should have paid closer attention to CEO Martinez’s contract because it gave him a guaranteed six months on the job after any termination action. This stymied the whole reason for Johnson firing Martinez, which was to move the obstinate and uncooperative CPS head out of the way during the upcoming CTU contract negotiations. Johnson and the union had counted on having a union advocate in the CPS chair.
Also, one willing to sign off on a massively expensive ‘payday loan’ at usurous rates to cover what was expected to be a hummer of a new teacher contract.
When Johnson’s puppet board marched into the first bargaining session between the two, Martinez went to court immediately afterward to have them banned – it was another part of his contract they’d neglected to notice. The CPS head had sole negotiating rights with the union for the CPS system.
OOPS
The contract negotiations are still ongoing, but the money trouble is piling up fast for the city of Chicago, and the mayor just can’t get anything to break his way.
One big problem?
Johnson has a looming pension plan payment that has to be made by the 31st of March and this contract to fund. He is still pressuring the CPS to take out a loan to make the payment instead of the city doing it.
How they’re supposed to pay it back is immaterial to Johnson as long as the CTU gets paid off.
NEW: Chicago Mayor Brandon Johnson is ramping up pressure on Chicago Public Schools to borrow $242M to fund a new contract with the Chicago Teachers Union and make a single year’s pension payment. The CTU is Johnson’s former employer and No. 1 campaign donor.
“You don’t want to… https://t.co/zM6I4uB2zL pic.twitter.com/YhpRk52h1w
— Austin Berg (@Austin__Berg) February 25, 2025
There’s some real doomsday humor about the amount of ‘saving the city money’ because it was initially $300M. Oh, yay!
But, wait – as they say in the infomercials – THERE’S MORE!
The city is also trying to get the city council to approve an $830M bond issue, which has its own problems. For one, the city’s credit rating just hit near junk-bond status and they wrote the proposal for the bond issue with enough gaping holes to drive the Teachers’ Union president’s private limo through.
Chicago Mayor Brandon Johnson asked the city to take out $830 million in bonds just one day after Chicago’s credit rating hit near-junk status, according to Standard & Poor’s Global.
Johnson claims the bonds are for infrastructure and capital improvements, but there is broad language in how the money could be spent. He could use it for the contract his former coworkers at the Chicago Teachers Union are seeking.
In listing acceptable uses for funds, the ordinance includes “loans or grants to assist individuals, not-for-profit organizations, or educational or cultural institutions, or for-profit organizations, or to assist other municipal corporations, units of local government, school districts, the State or the United States of America.”
Johnson could use the borrowed money to pay for the city’s contract with the CTU, which is his former employer and his largest campaign contributor at nearly $2.3 million. CTU is in the middle of contract negotiations with Chicago Public Schools.
S&P putting Chicago’s credit rating from BBB+ to BBB, two grades away from junk status, should be enough reason to reconsider borrowing nearly $1 billion. Illinois Comptroller Susana Mendoza said council members should reject the added debt.
Nobody is falling for the union in the tailpipe trick.
Johnson is now scrambling because he’s been caught out trying to grease the skids for his bosses at the CTU with the bond issue, he’s having no luck covering the pension payment that has to be made to close the 2024 books for the city – or face another credit downgrade – and the plans he and the city CFO are floating for managing this almost billion dollar bond issue sound like a fiscal nightmare.
It seems as if he’s still trying to pressure Martinez and the CPS into taking out a loan to cover his butt on the pension payment, but only as much as they have in their reserves now – not the extraordinary amount he started with last fall. He’s down to soaking the school system for $139M.
The ‘repayment’ part of ‘the bond issue plan’ is a complete hoot to anyone who’s ever had the sorry privilege of paying off a high-interest credit card.
WATCH: Chicago Mayor Brandon Johnson and CFO Jill Jaworski now say there will be changes to the language in their $830 million borrowing plan ahead of tomorrow’s vote. The changes “are to indicate those funds can only be used for capital [improvement projects].”
The mayor and… https://t.co/6hYHI28g2S pic.twitter.com/BgdfkBTZan
— Austin Berg (@Austin__Berg) February 25, 2025
…The mayor and his allies spent weeks claiming critics of the overly broad language in their borrowing plan were uninformed and acting in bad faith.
So this solves one problem with their borrowing deal. But a bigger problem remains: Making no payments on the debt for two years and no payment on the principal for 18 years after that.
Here’s why that matters.
Johnson is facing a $175M hole for a pension payment to MEABF. He needs that cash by end of March, or else he faces having to close the FY2024 books in deficit. And that may trigger a downgrade. This is why he’s pressuring Chicago Public Schools to borrow money in order to transfer their $139M in reserves to the city before the end of March.
But that still leaves him $36M short on the $175M hole.
The size of the skipped payments for the first two years of this infrastructure borrowing? About $36M.
So he’s basically still making a pension payment using this line of credit. Which very well could trigger a downgrade.
City Council members: you should not put your name on this tomorrow. They’re playing a shell game here. And you don’t want to be the mark.
This is some financial razzle-dazzle if ever there was any.
HOLY SMOKES
The Illinois comptroller is losing her number-crunchin’ mind over the amounts and the brilliant plan.
Furthermore, $830 is unnecessarily high. They should stick to the $75 million for Aldermanic menu priorities (fixing streets, potholes, other infrastructure). Think critical needs, not wants. Include critical capital needs for police & fire (vehicles, ambulances, fire engines,…
— Susana A. Mendoza ☮️ (@susanamendoza10) February 25, 2025
…And mission critical infrastructure like bridge repairs. With $100 – $150 million and a clear plan on how to repay it, emergency needs can be addressed at a time when revenues aren’t there. Also, negotiate the lowest possible interest rates & fees. Add a provision that makes sure there’s no penalty for paying the loan off early.
This is a time to show fiscal restraint and structure a smart, tight loan with a clear repayment plan with favorable terms/rates/fees. Address mission critical needs while showing that you have the fiscal discipline to not go on a wild shopping spree, especially when you’re hovering above junk status, refused to make cuts, and are facing strong financial headwinds.
“Trust me” isn’t a sound approach to taking on additional debt in the wake of terrible financial decisions from @ChicagosMayor and a recent credit downgrade, immediately followed by an attempt for $830 million more that will cost taxpayers $2 BILLION. Show taxpayers what exact mission critical projects need the funding (not categories but actual projects) because transparency breeds accountability and trust.
Do only what you absolutely need now, and hold off on non-critical borrowing for when rates are lower and the financial environment is more stable and predictable.
In the absence of this type of sensible restructuring, ask your alderman to vote NO.
There’s one helluva difference between financing $75M and paying back almost a billion with a ‘B.’
And you’ll never guess who taught him how to do math like that.
Thank a teachers union.https://t.co/LAK6DQhW4H
— Illinois Policy (@illinoispolicy) February 25, 2025
