ALDERMEN QUESTION PLAN TO RETIRE SCOOP-AND-TOSS BORROWING

Chicago aldermen pushed back Monday against Mayor Lori Lightfoot’s plan to get around the Treasury Department’s ban on using federal COVID-19 relief funds to retire debt.

Lightfoot’s original plan called for using more than half of the $1.9 billion in federal relief funds headed to Chicago 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 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 stretches the payments into the future.

But during a subject matter hearing Monday on city finances, some aldermen essentially said, “Not so fast.”

Ald. Sophia King (4th) asked the mayor’s financial team 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.

“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 vs. paying scoop-and-toss immediately and different versions of that? Have you weighed the cost of doing that?”

Chief Financial Officer Jennie Huang Bennett said she’s working on a “sizable investment package.” The “exact dollar amount” won’t be known until the mayor introduces her 2022 budget in mid-September.