SNEAK PEEK AT MAYOR’S SPENDING PLAN

Millions in stimulus cash allotted for community development, affordable housing, homeless support

Mayor Lori Lightfoot moved up her 2022 budget address by a month to coincide with the unveiling of her plan to spend the $1.9 billion avalanche of federal stimulus funds on its way to Chicago.

That’s where much of the action will be during this year’s budget hearings as aldermen continue to push back against Lightfoot’s plan to use a financial shell game of sorts to get around the U.S. Treasury Department’s ban on using federal COVID-19 relief funds to retire debt.

Now, influential aldermen have gotten a broad strokes, sneak peek at the investments the mayor has planned.

The grand total of new investments is $1.2 billion. That includes $567.6 million in stimulus funds and $660 million from the Lightfoot’s 2022 capital bond issue.

Lightfoot originally intended to use more than half of the $1.9 billion in federal relief funds 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 financial 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 by stretching out the payments — tosses that obligation farther into the future.

That’s in addition to Lightfoot’s plan to refinance $1 billion in debt at reduced interest rates during the fourth quarter of this year and use the $250 million in savings to pay for retroactive pay raises for Chicago police officers.

Ald. Sophia King (4th), chairwoman of the City Council’s Progressive Caucus, has already used a Council hearing to question the mayor’s financial team on 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 laid bare by the pandemic.

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

Chief Financial Officer Jennie Huang Bennett told King city officials were trying hard to balance the need to spend more on mental health, affordable housing and anti-violence initiatives with another pressing need: “Repayment of what, in essence, is scoop and toss, which also has very negative ramifications.

“We are working towards a proposal that’ll balance both. Understanding the importance of investments that there are significant needs. But also understanding that we need to find a financially responsible path forward,” she said that day.