Mayor Brandon Johnson has hired his third chief financial officer and the choice is an intriguing one.
Ashlee Gabrysch, senior director at Fitch Ratings, is set to take over as Chicago CFO later this month.
The choice intrigues us because Gabrysch in February was one of two Fitch analysts who downgraded the city’s general-obligation credit rating and kept a negative outlook on Chicago’s credit afterward.
Fitch’s report at the time was bluntly critical of the Johnson administration’s sale of more than $500 million in taxable bonds in large part to cover operational costs, mostly back pay owed to firefighters under their labor contract and settlements of lawsuits, predominantly over alleged police misconduct. At the time, in a statement to us, Gabrysch criticized the structure of the bonds, which conveniently for Johnson’s potential reelection bid pushed off any and all debt-service payments until 2029, as akin to the city’s frequently used practice in the past of “scoop and toss.” That frowned-upon municipal finance maneuver refers to refinancing existing bonds and extending their duration to relieve pressure on near-term budgets but increasing the financial cost of whatever investments were covered.
“While not an actual scoop and toss, the city’s choices do throw the city’s current and past liabilities into the future,” she told us back then.
Just to be clear, in the lexicon of municipal finance, that is bad.
Gabrysch takes on the all-important job of CFO as the financially teetering city prepares for an upcoming budget season that could easily be as harrowing as last year’s. And last year’s was an all-timer.
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Johnson brought the city as close as it’s ever come to beginning the year without a budget before agreeing to allow the tax-and-spending plan hammered out by an opposition bloc of aldermen to become law without his signature. The drama, which centered on the mayor’s deeply misguided push for a monthly tax on each job provided by the largest private-sector employers in the city, played a role in Fitch’s downgrade as well.
Will Gabrysch be tasked with trying to sell the same policy again as Team Johnson faces another substantial budget deficit for 2027? The same quarreling sides are gearing up for the upcoming budget, but this time we’re in an election year. There’s been no sign of rapprochement to date.
Gabrysch should have the ability to push back on some of the mayor’s worst impulses given how hollowed-out his administration has become. Gabrysch’s predecessor, acting CFO Steven Mahr, and his top deputy resigned late last month, a shock given that budget season was just around the corner. Shortly thereafter, even more surprisingly, Budget Director Annette Guzman departed.
The parade of senior officials out the door prompted Johnson to aver that his administration was stable so long as he was mayor. “I’m the continuity,” he said, a remarkable statement that we suspect will go down in the annals of memorable mayoral utterances.
At the very least, Gabrysch brings to the CFO position a keen knowledge of how bond investors view this administration and the city’s finances. Her hiring surely reflects Johnson’s own worries about the city’s credit standing.
Which is precarious.
Three ratings agencies — Fitch, Kroll Bond Rating Agency and Standard & Poor’s — all have negative outlooks on the city of Chicago’s general-obligation ratings after each of them downgraded the city’s credit during Johnson’s term. Kroll has nicked the city’s credit twice since Johnson became mayor in 2023. Moody’s Investor Service lowered its stance on the city’s credit to stable from positive late last year, but its current rating is just a single notch above junk status.
Remaining an investment-grade credit risk is essential to giving Chicago the runway to achieve fiscal stability. A downgrade to junk would force many investors in the city’s bonds to sell their holdings because their funds promise to hold only investment-grade paper. That would cause values on Chicago bonds to plummet and could well shut off the city’s access to bond markets.
That would be disastrous.
As an analyst of the city’s finances over the past seven years, Gabrysch understands these stakes acutely. We hope she can properly convey the risks to a mayor who’s presided over four credit downgrades.
So far.
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