During a contentious special City Council meeting Tuesday, Calumet City narrowly approved a plan to pay an $8 million backlog of bills through a 5-year bond, with Mayor Thaddeus Jones casting a tie-breaking vote.
The city’s financial consultant, John Kasperek, said taking out a loan, either through a bank or public offering, is the only viable option to quickly reimburse vendors that have in some cases waited for two years to receive payment for provided services.
“These vendors are constantly threatening the city with legal action,” Kasperek said.
Kasperek said he hopes to convince Fifth Third Bank or other investors to allow the city to use revenues from its 1% grocery tax as collateral. Otherwise, the city will agree to raise property taxes as needed to pay off the debt.
The city instituted new taxes in August to raise revenue, including the 1% grocery tax that replaced the tax formerly collected by the state, a 1% tax on food and beverages, a 1% tax on vehicle rental and a gas tax increase from 1 to 2 cents per gallon. Water and sewer rates were also increased to pay off a bond from 2015.
Kasperek said even though the city expects a $2 million surplus in the upcoming budget, it will not be able to pay off the $8 million for several years.
Jones said with the bond’s help, the city will not need to cut costs further. The city laid off 46 people, including 13 union public works employees, on May 22.
“I know it will be enough to get us where we need to be,” Jones said.
Meanwhile, four the city’s seven aldermen said the mayor forced their hand by failing to take action sooner. Kasperek reported since 2023, the city has operated in budget deficits ranging from $2.8 million to $4.7 million.
“There’s just too many areas that we could have cut that I feel like we didn’t cut,” said 2nd Ward Ald. Monet Wilson said. “We didn’t get here overnight.”
Wilson and other aldermen raised concerns about the past hiring of officials making six figures whose jobs may not be needed.
They also expressed continued frustrations over Jones’ past spending, racking up $44,000 on a city credit card in September, much of which was during the Congressional Black Caucus’ 54th annual legislative conference in Washington.
The council voted to lower the credit card limit from $50,000 to $5,000 but continue to report difficulties receiving financial information from city staff, despite hiring its own legal counsel in December.
“It’s very unfortunate tonight that we’re proposing a loan to pay debt,” 5th Ward Ald. DeJuan Gardner said. “This is the core example that this council has talked about when it comes to wasteful spending. We should not be in this predicament.”
Jones defended his spending and leadership, saying he didn’t create the backlogged bills.
“I’m not responsible,” Jones said. “Wasteful spending cannot do this to a budget.”
He said the unexpected budget shortfalls, coupled with repeatedly late tax bills from Cook County, caused the financial crisis.
But Gardner doubled down, saying “everything adds up.”
“It has everything to do with the budget because it’s still money being expended,” he said. “Mayor, you just act like you don’t understand money.”
By the time the City Council voted on the $8 million loan plan, Alds. Wilson and Miacole Nelson had walked out of the meeting.
Alds. Shalisa Harvey and Ramonde Williams voted in favor of the proposal, while Gardner voted against and Ald. Melissa Phillips voted present. Jones broke the tie, voting in support.
ostevens@chicagotribune.com
