Mayor Johnson Plans to Refinance City Bonds for $65-71M to Close $85M Budget Gap

Mayor Brandon Johnson said Tuesday his administration will refinance a batch of 10-year-old city bonds next month, a move expected to generate $65 million to $71 million in savings and close most of an $85 million hole in the city's 2026 budget.

The announcement, made at a City Hall press conference, arrived alongside another round of criticism from Johnson aimed at the City Council alderpeople who wrote and passed a competing budget plan last December. Johnson did not sign that budget but also declined to veto it, and it has governed the city's finances for 2026.

The mayor had warned earlier this summer that the shortfall tied to the council's plan could grow past $130 million. His budget office now says stronger than expected revenue and lower spending by city departments have shrunk that number, leaving $85 million left to fill. Beyond the bond refinancing, the city said it could tap remaining American Rescue Plan Act dollars, which expire at the end of the year, or draw from reserves in the city's grant management fund, which covers administrative costs for grant programs. Acting budget director Jonathan Ernst said in an interview Monday that dipping into the grant fund would only happen if necessary.

The refinancing itself doesn't require City Council approval. Ernst described it as routine, something the city's finance team evaluates annually depending on market conditions, and said it carries no hidden cost down the line. "It's not pushing debt out. It's truly just reducing our costs this year," Ernst said. "It doesn't mean that we'll be paying more next year. It doesn't mean we'll be pushing these bonds out additional years. It's simply a savings this year that we realize without it impacting the future of the city's finances."

The budget fight traces back to October 2025, when Johnson proposed a 2026 budget that revived a corporate head tax charged per employee at large companies and added a new fee on big social media platforms based on user counts. The head tax, which Chicago phased out in 2014 after businesses argued it cost jobs, drew immediate opposition from a bloc of alderpeople including Nicole Lee (11th), Scott Waguespack (32nd), Gilbert Villegas (36th) and Samantha Nugent (39th). That group wrote its own alternative budget, which the council passed just before Christmas without the head tax.

That alternative plan leaned on a different set of revenue sources: legalizing video gambling machines in bars, selling city-owned debt to outside collectors, allowing advertising on bridge houses and light poles, and licensing city property for augmented reality applications such as location-based games. Alderpeople estimated the debt sale alone could bring in roughly $90 million.

Eight months into the fiscal year, most of those revenue streams haven't materialized. Johnson said Tuesday that only two banks responded to the city's request for proposals on the debt sale, and both ultimately walked away from the deal. He has repeatedly called the council's revenue ideas "speculative" and "untested."

The alderpeople who built the alternative budget aren't backing down. In a joint statement Tuesday, the coalition accused Johnson of failing to execute the budget as required by law and of "slow-walking" the structural revenue and efficiency measures the council approved. "Instead, he has focused on finger-pointing to deflect from his failures and now is using accounting gimmicks that, in reality, won't close our structural deficit, but it does repeat more harmful fiscal practices inflicted on taxpayers by this administration," the statement said.

Ernst pushed back on the claim that the administration has dragged its feet on the council's revenue measures, saying the city has actively pursued the debt sale and other components of the plan. Johnson and the council coalition have disputed who bears responsibility for the shortfall since spring, and City Hall is still working to finalize the 2026 books.

The refinancing is set to move forward next month regardless of the ongoing dispute, since it requires no council vote. What remains unresolved is how the city will approach budget season for 2027, which typically begins to take shape in the coming weeks. Johnson's office has not said whether he will again propose a head tax or other new revenue sources, and the council coalition that authored the 2026 alternative budget has given no indication it plans to abandon its approach heading into the next cycle.