Financial experts warn of rising debt as credit rating drops

CHICAGO – The City Council is set to vote on Mayor Brandon Johnson’s proposed $830 million bond issue, sparking concerns about its long-term impact on Chicago’s finances. The plan, aimed at funding infrastructure projects, comes as the city’s credit rating was downgraded to BBB, just above junk status.

The bond proposal follows a recent decision by Standard & Poor’s Global to lower Chicago’s credit rating from BBB+ to BBB, just two levels above junk status. The agency cited the city’s reluctance to cut spending and uncertainty around future revenue streams as major factors in the downgrade.

“The rating action also reflects our view that following the 2025 budget negotiations, the city’s practical options for raising new revenue appear less certain, as does the willingness of city leadership to cut spending, creating a level of uncertainty around its financial trajectory that is more appropriately reflected in the lower rating,” S&P Global stated in its report.

Despite the downgrade, the Johnson administration remains committed to the borrowing plan, a move that has drawn criticism from financial experts and city officials who fear it could worsen Chicago’s financial outlook.

Critics argue the borrowing plan could worsen the city’s financial outlook, with reports suggesting an interest-only repayment structure for 20 years—potentially pushing total costs above $2 billion.

City officials defending the plan insist Chicago’s financial health remains strong. However, analysts warn that ignoring credit rating concerns could lead to higher borrowing costs and reduced investor confidence.

Chicago’s ongoing budget deficits and pension obligations have already led to multiple credit downgrades. If approved, increased debt payments could strain essential services like public safety, education, and infrastructure. Businesses may also face higher taxes and fees to cover mounting liabilities.

With the vote approaching, council members face mounting pressure to ensure fiscal responsibility. Opponents urge alternative revenue strategies and spending cuts instead of adding more debt.