In early 2025, the Chicago City Council narrowly approved Mayor Brandon Johnson’s request to issue $830 million in general obligation bonds, with the mayor casting a rare tie-breaking vote to secure passage. The decision came amid growing concerns about the city’s worsening credit ratings and mounting debt burdens.
Just days before the vote, Standard & Poor’s downgraded Chicago’s general obligation debt rating for the first time in a decade. Since then, two additional rating agencies, including Kroll Bond Rating Agency, have also lowered their assessments of the city’s creditworthiness, with Kroll issuing multiple downgrades. Critics of the bond issuance highlighted the city’s financing structure, which allowed the city to defer interest payments for up to two years, effectively increasing the total cost of servicing the debt. Opponents warned that the $830 million in bonds would eventually cost taxpayers around $2 billion in interest under the prevailing rates, a figure that could rise given the city’s recent fiscal challenges.
In response to the financial strain, several aldermen have proposed a new ordinance that would require future bond authorizations to receive a three-fifths majority vote in the City Council. The panel’s Finance Committee approved the measure by a 21-9 vote earlier this week, despite opposition from Johnson’s administration. Supporters argue this policy would apply equally to current and future mayors, bringing greater oversight to the city’s growing reliance on debt.
Chicago’s fiscal situation remains precarious. Under Johnson’s tenure, annual debt service costs—the repayment of principal and interest—have increased sharply. In 2023, debt service totaled just over $2 billion, but forecasts project this figure to reach $2.47 billion in 2025 and $2.5 billion by 2028. While some of this increase derives from bonds supporting O’Hare Airport infrastructure, general obligation debt service paid through property taxes is also rising, expected to climb from $323 million in 2024 to $539 million in 2028. The city’s total general obligation debt is projected to grow to $5.9 billion by 2028, up from under $5 billion in 2024.
Further bond sales are anticipated, with the administration planning to issue $600 million in new general obligation bonds around the week of Oct. 19 to fund capital projects, according to newly appointed Chief Financial Officer Ashlee Gabrysch. Market observers are closely watching the terms of this sale, including interest rates and repayment structures, amid concerns the city may again opt for back-loaded payments that elevate long-term interest costs.
On Sept. 15, S&P reaffirmed Chicago’s BBB credit rating—two notches above junk status—but maintained a negative outlook, citing slow progress on cost-saving measures recommended in a comprehensive Ernst & Young report last year. With an $882 million projected deficit for 2027 and elections approaching, upcoming budget discussions are expected to remain contentious.
Chicago allocates roughly 40% of its budget to debt service and pension obligations, the highest proportion among major U.S. cities, underscoring the urgency of fiscal restraint. Alderman Marty Quinn, who initially advocated for a two-thirds majority vote requirement on bond issuances, revised his proposal to a three-fifths threshold to encourage broader consensus without granting a small minority veto power.
Proponents contend the measure would enhance fiscal responsibility and could bolster investor confidence. Given four bond rating downgrades during Johnson’s administration, advocates say the city needs tighter controls over debt authorizations to prevent further deterioration of its financial standing. As Chicago grapples with its heavy debt load, the City Council’s move to require greater approval for bond issuances marks a significant effort to impose greater oversight on the city’s borrowing practices.