The recent stimulus package will send $1.9 billion in relief to Chicago, but city officials have warned alderman that no spending spree is incoming.
The city will use over half of the relief money to pay down debt incurred during the pandemic.
From the Chicago Sun-Times:
More than half of the $1.9 billion avalanche of federal relief on the way to Chicago will be gobbled up by retiring $965 million in scoop-and-toss borrowing used to eliminate the pandemic-induced shortfall, aldermen were told Wednesday.
Mayor Lori Lightfoot has warned aldermen to keep their wish lists in their back pockets because the money will have strings attached and it’s “not a slush fund that we can use every way that we can.”
On Wednesday, top mayoral aides explained why.
Roughly half of the $1.9 billion in new federal funds earmarked for Chicago will be used to honor the promise the mayor made before the City Council approved her $12.8 billion budget by the narrowest margin Chicago has seen since Council Wars.
That promise: canceling the scoop-and-toss borrowing that was one of the most controversial elements of her 2021 budget.
The budget called for the city to refinance $1.7 billion in general obligation and sales tax securitization bonds and claim $949 million in savings in the first two years. That approach would have extended the debt for eight years and returned Chicago to the bad borrowing days that former Mayor Rahm Emanuel ended, although not nearly fast enough to satisfy Wall Street rating agencies.
“We said during budget season that, if we received federal funds, we would have to first repay our debts. That debt includes the $465 million of scoop-and-toss used to address the 2020 shortfall and the $500 million to address the 2021 shortfall,” Chief Financial Officer Jennie Huang Bennett told the Council’s Budget Committee Wednesday.