City Council approves mayor authority to borrow nearly $2B
February 5, 2014 (CHICAGO) (WLS) -- Chicago's City Council approved Mayor Rahm Emanuel's plan giving him the authority to borrow almost $2 billion.
The mayor says issuing nearly $2 billion more in bonds is the next phase of his strategy to stabilize Chicago's finances.
The council approved the $1.9 billion borrowing plan in fewer than five minutes. Only four aldermen opposed the bond issues approved by the finance committee barely 48 hours earlier.
"There should have been readings on this. We should have been having briefings a month in advance of this vote," said Ald. John Arena, 45th Ward.
"There are other alternatives and the mayor needs to bring everybody to the table," said Ald. Robert Fioretti, 2nd Ward.
Chicago's credit rating suffered a triple downgrade last year. City taxpayers already guarantee $7 billion in bonds while on the hook for an additional $19 billion in unfunded pension debt.
"And if we can't get Springfield to focus and figure that out, then we are in deep trouble," said Ald. Will Burns, 4th Ward.
The mayor insisted Chicago was not on the same road to bankruptcy as taken by Detroit.
"Detroit is totally dependent on the auto industry. We have an extremely diverse economy we have no one sector," Emanuel said.
Some of the bonds would refinance existing debt, while others would pay current expenses, including legal settlements in police abuse cases.
"The city is borrowing to pay many, many sins of the past," said Antonio Romanucci, plaintiff's attorney.
"Unless you're talking about cutting services, raising taxes; we have to come up with options," said Ald. Danny Solis, 25th Ward.
"This problem wasn't created overnight. It's inherited from a set of practices years on making," Emanuel said.
The mayor, running for election next year, also rejects spending cuts and/or higher taxes as alternatives to borrowing.
"You do something so dramatic, you'll likely throw the economy into recession. I think that's a bad idea," Emanuel said.
Because the city's credit was downgraded last year, Chicago will have to pay a higher interest rate on money borrowed. City officials will not know how much more interest they'll pay until they actually go to market with Chicago bonds.
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