Does Brandon Johnson really want his legacy as Chicago mayor to be presiding over multiple credit downgrades after his two predecessors worked hard to lift Chicago’s status in the eyes of the all-important bond market?
Our city’s mayor apparently is quite prepared to wear that jacket.
It took analysts at S&P Global Ratings barely a minute after the Johnson administration issued its proposed 2026 budget to revise their outlook on the city’s credit condition to negative from stable. That previous stable outlook, by the way, came only after S&P downgraded Chicago’s rating to two notches above junk status early this year.
“We are watching as the fiscal 2026 budget negotiations advance over the coming weeks to assess the credit significance of the final budget package, but, absent a significant change in the approach to achieving structural balance, we believe the probability of a downgrade could remain elevated into the fiscal 2027 budget cycle,” S&P wrote in its Nov. 5 report.
We emphasize: Absent a significant change in approach.
Bond analysts generally communicate in cold-blooded terms and often use hedges in their reports, so this warning is about as stark as it gets in that world. If Johnson’s budget is approved essentially as proposed, you can bet on a downgrade.
Why does that matter? The city has been on a borrowing binge under Johnson, largely to fund infrastructure projects, many of which are needed. Continued and affordable access to bond markets is critical to keeping roads, bridges, sidewalks, parks and other public works from crumbling.
And then there’s the small matter of the administration’s plan to borrow next year for operational needs for the first time since Johnson took office in 2023. The budget calls for putting about $275 million on the city’s credit card to cover back pay owed firefighters and $90 million in legal settlements, mainly tied to past police misconduct.
Chief Financial Officer Jill Jaworski told us a few days ago the city intends to tap bond markets for infrastructure and those operational costs early next year. S&P will have had some time to ponder whatever budget emerges from the City Council and may well already have downgraded by then. That could add hundreds of millions to whatever interest taxpayers must absorb on those bonds.
At a news conference last week, Johnson was asked directly about S&P’s clear warning, and his response was dismaying. He bragged that 65% of his budget’s solution to the pending $1 billion-plus deficit was structural in nature, and when corrected by a reporter who said the figure the administration had given earlier was 60%, Johnson essentially said the equivalent of — 60% or 65%, whatever.
The budget passed last year contained provisions that the administration said structurally plugged 68% of the deficit at that time. And S&P responded with a downgrade, concluding that 68% was insufficient. So 60% will be just fine with the analysts this time around?
Johnson sidestepped the question about the city’s shaky standing with ratings agencies and defended his budget in moralistic terms, saying the people he’s considering are poor and need help. Most Chicagoans agree with that sentiment as a general matter.
But without access to reasonably priced credit, good intentions count for little. Among any mayor’s most important tasks is safeguarding the city’s financing standing. On that measure, Johnson is failing — and, worse yet, doesn’t seem to care.
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