Chicago Mayor, Facing $1.15B Deficit, to Unveil New Budget

Watch Chicago Mayor, Facing $1.15B Deficit, to Unveil New Budget - Bloomberg on Dailymotion

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00:00When it comes to this budget that the mayor is proposing, what are you looking for in terms of

00:07the hard decisions that need to be made? Obviously, higher taxes and spending cuts will be part of it,

00:13but what specifically will jump out at you, do you think?

00:16Well, that's actually the question, is that what mix, if at all, is there going to be of cuts and

00:22taxes? The mayor, historically, in his first couple of budgets, has rebuffed any suggestions

00:29to make cuts, furloughs, layoffs, or anything like that. So he has not included that really in part

00:34of his previous two budgets. Now, there have been recommendations from a working group paper for the

00:40mayor to do just that, but that's to be seen. In terms of revenue, he has really been, since his

00:46campaign days, really focused on trying to get corporations and what he calls the ultra-rich to

00:52pay more taxes and what he calls their fair share of taxes. So that's going to be something that I'm

00:58looking for. Is there going to be a notion of making cuts to the city budget and what revenue

01:04mix is there going to be? How much debt or to what extent will Chicago need to issue debt in order to

01:10cover some of these shortfalls? Well, operational debt is very different than, say, capital debt or

01:17any other type of debt. So the city, historically, has been very active in the municipal bond markets,

01:23but generally it's for things like infrastructure. They're going to be very active, actually, in the

01:28third, excuse me, the fourth quarter for their airport financing. But that's separate from the

01:34city's budget. So operational debt is not something that I've heard of. And what they are trying to

01:39really focus on right now is how to close that $1.5 billion deficit with what the mayor has in his

01:46hands for 2026. All right. I guess that to what extent does any potential ratings downgrade on

01:53Chicago then factor into what the decisions that the government needs to make? Yeah. So the rating

01:59firms for a long time have signaled that one of the biggest pressures, one of the biggest points

02:04weighing on the city of Chicago has been its pension liabilities. The city has a very large pension

02:10liability dating back for decades because of lackluster contributions and some decisions that

02:17were made years ago. But right now, one of the things that the administration is going to have

02:22to focus on is how they tackle that. They've seen their pension costs increase given recent legislation,

02:27but there is going to be also a question about whether they're willing to make some cuts

02:32going forward because of this ongoing structural deficit that the rating firms have pointed out in the

02:39past.

02:41See you next week.

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