New Chicago Mayor Lori Lightfoot (D) is “smart to keep property taxes on the table” as the city begins to consider how to tackle its financial challenges, said Alderman Scott Waguespack (D), who was confirmed today as chair of the powerful City Council Finance Committee.
As finance chair, Waguespack also said he would keep the city’s ratings top of mind, and that he aims to bring “predictability and stability” to the city’s fiscal position.
Waguespack spoke with reporters today after Lightfoot’s first city council meeting. The council overwhelmingly approved Lightfoot’s reorganization of the council, which establishes Waguespack, a member of the council’s progressive caucus, as a key member.
Lightfoot has released few details on how she plans to tackle Chicago’s financial headwinds, except to say she’s lobbying state lawmakers for a new casino and money from legalized recreational weed and a graduated income tax. She’s mentioned consolidating the city’s badly underfunded pension funds, though Waguespack said he hasn’t talked with her team yet about any pension plans.
Lightfoot said yesterday (28 May) after speaking at the City Club of Chicago that she plans to make a speech soon that outlines her financial proposals for the city. She also said property taxes are “killing people,” but later said raising the property taxes is not off the table.
“She’s smart to keep it on the table,” Waguespack said. “We want more predictability and stability and that has to come with producing revenue streams, and looking at the cost cutting we can do.”
The new administration takes over as Chicago faces steep spikes in pension contributions and a revenue gap that Lightfoot says is higher than USD 700m. Waguespack said he hopes to meet soon with new CFO Jennie Huang Bennett and the budget office to plan hearings on key financial issues.
“I want to make sure we’re having the right kind of hearings on these issues, so when we have to roll something out… we’re giving people enough time to really review it.”
Lightfoot has downplayed former Mayor Rahm Emanuel’s (D) proposal to issue USD 10bn of pension obligation bonds (POBs), and Waguespack today called a POB borrowing “pretty volatile.”
“I’d prefer to do anything else before we get to that,” he said.
Waguespack also said he’ll keep an eye on the city’s ratings, noting that he spoke recently to the Chicago Municipal Analysts Society.
“Everyone who came up to me after said the ratings were very important and to keep that in mind,” he said.
On working with public finance bankers, Waguespack said all deals would be made in the open.
“I won’t be telling the public one thing and working with people behind closed doors on another thing,” he said. “We’ll be more open in our office, we’ll be more collaborative, but we won’t be holding up deals to benefit privately,” he said. “I hope we can provide more predictability and stability in a more fair way for people in the financial community so they understand that we’re moving forward but there won’t be any strings attached to any decision-making going on.”
Chicago’s general obligation (GO) pledge carries ratings of BBB- by S&P; BBB by Fitch; and Baa3 by Moody’s Investors Service.
A USD 222m tranche of City of Chicago GO bonds Series 2019A with a 5% coupon due in 2044 sold today for 108.5 to yield 3.95% in round lot trading, according to Electronic Municipal Market Access.
by Caitlin Devitt in Chicago