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2026-03-21 Government Corruption
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Windy City's fiscal death spiral prompts bankruptcy talk as bond ratings tank
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[FoxNews] Chicago's teetering debt is stark warning left-wing mayor is fueling 'pay later' doom cycle: expert. Austin Berg of the Illinois Policy Institute says Mayor Brandon Johnson's $830M bond deal, with no principal payments for 20 years, mirrors a notorious parking meter blunder.
Chicago Mayor Brandon Johnson and his administration are presiding over a city in serious financial straits.
Chicago, the nation’s third-largest city, is facing a corporate fund budget gap of more than $1 billion, while its 2025 fiscal year is projected to close with a roughly $150 million deficit with about two-fifths of the budget going toward debt service and pension costs.
Johnson said in April the city was "at a crossroads" and had to "essentially do more with less," while simultaneously slamming the Trump administration for reportedly threatening federal funding, calling it a "different scenario we weren’t under before."
Austin Berg, executive director of pro-taxpayer research group Illinois Policy Institute, said markets are looking at the true numbers and are "really concerned" about Chicago.
"And that's why you see the spreads on Chicago debt getting wider and wider — the structural issues," he said.
Berg explained that the situation is akin to someone calling financial advisor Dave Ramsey’s radio show to ask what to do while buried in debt.
"The solution set is always the same: Stop making bad decisions, and you have to put a structure in place to make better decisions," Berg said.
"So, the bad decisions are things like taking one-time revenues from federal COVID spending and putting it into operations. The bad decisions are borrowing for operations, which this latest bond issue just did. That's a huge no-no and a red flag for investors."
Chicago also drew scrutiny over former Mayor Richard M. Daley’s 75-year parking meter lease in 2008, a deal critics say has already allowed the private operator to recoup its investment while leaving the city without that revenue stream for decades.
Berg pointed to a recent analysis he authored accusing Johnson of extending the city’s "pay later" culture, arguing that the mayor’s $830 million 2025 bond deal, which delays principal payments for 20 years, is his version of Richard M. Daley’s parking meter boondoggle.
He also suggested the city take more seriously a plate of $1 billion in potential efficiencies produced in a taxpayer-funded deep-dive by consulting firm EY, formerly Ernst & Young.
While Chicago spends 40% of its money on debt service, actual services suffer, Berg said, adding is also the only city besides New York that doesn’t require voter approval of new general obligation debt.
The city lacks a "truly independent" chief financial officer, Berg claimed, saying that the treasurer’s office does not have full auditing authority and that another related agency called COFA is understaffed and lacks resources.
"Voters didn't decide to have all of that debt. And it's important for voters to be able to decide because those decisions affect Chicagoans 30 years from now. So, shackling them with these political decisions now is just really unfair," he said.
Chicago has also come under fire for expenditures on social justice and other efforts while city services continue to lack.
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