Chicago’s credit rating was downgraded by two agencies today, a rebuke that lands squarely in the middle of an ongoing budget fight between Mayor Brandon Johnson and the City Council.
The downgrade reflects mounting concern about the city’s reliance on borrowing and one-time revenue — and serves as a “wake-up call,” said one municipal finance expert, that political infighting is compounding Chicago’s long-standing structural deficit.
Despite the warning, Johnson and the City Council coalition that passed a budget over his objections sought to shift the blame to the other, a clear sign the 2027 budget process will be just as combustible as last year.
While the Council increased the city’s advance pension payment to shore up its four beleaguered retirement systems, it also kept $449 million in borrowing for operating costs that had been included in Johnson’s proposal.
The agency also downgraded the city’s outstanding bonds, from AAA to AA+, tied to the Sales Tax Securitization Corporation, a vehicle created by former Mayor Rahm Emanuel to separate the city’s sales tax revenue from the general fund in order to borrow at lower rates. The city has increasingly relied on the STSC for new bond issuances.
KBRA, another credit rating agency, also downgraded the city’s general obligation bonds and assigned a BBB+ rating, just above non-investment grade status, to the upcoming sales.
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