Mayor Brandon Johnson’s administration again warned aldermen Thursday that their plan to sell $1 billion in city-owned debt isn’t finding any takers, leaving a hole in their 2026 budget package.
Banks continue to refuse to take on the role of selling the debt, citing a host of challenges making it a bad deal for the city and sellers alike, according to a memo sent to aldermen by Johnson’s top budget staffers.
It’s another blow for one of the most controversial parts of the city’s 2026 budget Johnson opponents passed over the mayor’s objections.
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At the time, Johnson’s budget team warned the sale of debt like decade-old vehicle tickets would not bring in the $90 million aldermen counted on, a prediction the new memo says is proving true.
Only two banks responded to the city’s request for proposals on selling the debt by a May deadline, according to the memo required by a City Council ordinance and authored by Comptroller Michael Belsky.
That feeble response grew weaker when Bank of America walked away from the proposed debt sale after several meetings earlier in the summer. More recently, the bank Stifel determined “the challenges and risks of the transaction outweighed any potential benefit to the city” after two July meetings, Belsky wrote.
In the memo, Belsky wrote that the challenges the administration has faced in trying to find an institution to sell the debt “have been consistent and, among other considerations, include the confidentiality and privacy of citizen data, the viability and risks of the endeavor (particularly risks associated with legal challenges), future policy or legislative decisions, reputational concerns of potential buyers, and public-interest considerations.”
Johnson has been a vociferous critic of the idea since before it became law, blasting aldermen’s $90 million estimate as speculative and warning that such a sell-off could sic debt collectors on poor Chicagoans. But aldermen opposed to the mayor plugged ahead, passing the revenue package that included the debt sale in a 29-19 vote, and Johnson decided to not veto it as a critical Jan. 1 deadline approached and he seemed unlikely to be able to pass an alternative.
Aldermen have since argued that Johnson has intentionally blocked key efforts to install their budget, including by dragging his feet on efforts to legalize video gambling machines in the city and by making only a half-hearted effort to sell the debt.
Reacting to the memo Thursday afternoon, Ald. Anthony Beale, 9th, said the sale has likely failed because of the terms placed on it by Johnson’s administration. The mayor is not actually trying to complete the debt sale and is instead “in sabotage mode,” he said.
“This administration is systematically trying to make this budget fail, they’re not trying to actively make it work,” said Beale, one of Johnson’s most vocal opponents during the budget fight.
For his part, Johnson has maintained aldermen passed an unbalanced budget. Key proposals approved by the opposition he dubbed the “corporate caucus” have come up $130 million short, though the city was only $32 million under budget through May because other revenues have outperformed expectations, the mayor said at a July news conference.
Johnson’s administration has made a good-faith effort to sell the debt, said Rhett Bomher, a senior city finance officer.
In addition to typical public solicitations, the mayor’s finance team took the unusual step of reaching out directly to 20 financial institutions to pitch the sale, Bomher said. A dedicated administration working group has held over 25 meetings focused on the debt sale this year, he added.
“It’s been a really broad and deliberate effort to try to really ensure that we have great partners coming to the table that would structure a transition that quite frankly is a first-in-the-nation type of program,” he said.
Bomher said the plan is unprecedented and added that the responding banks have told the city they would make just $5 million to $10 million from such a sale, a return that would shrink further with seller and consultant fees.
The memo comes at a key moment for the Johnson administration’s finance arm.
Two leaders — Budget Director Annette Guzman and acting CFO Steven Mahr — have left City Hall in recent weeks, just as the administration prepares for another sure-to-be-grueling budget season set to begin in October.