Mayor Johnson’s Budget Sinking Chicago Further Into Debt After Credit Agency Downgrades

Brandon Johnson shoves Chicago closer to insolvency

Early in March, Chicago Mayor Brandon Johnson took another major financial step backward by issuing $500 million in taxable bonds just to pay for the back pay owed to city firefighters and the mounting legal settlement connected to the issue. This was after the city suffered two debilitating credit downgrades.

Johnson’s failures are driving Chicago further into massive and destructive debt that will be extremely difficult for any future mayor to fix.

Bond analysts and investors have been watching Chicago with a jaundiced eye as its financial stability continues to crater. Late in February, for instance, two major credit agencies downgraded Chicago's ratings, which was yet another blow to the city presided over by Johnson.

In one case, Fitch Ratings gave Chicago a BBB+ overall, while downgrading sales tax securitization from AAA to AA+, basing their decision on Chicago's budget battles and chronic deficits, CBS News reported at the time.

Fitch stated its decision came after the budget negotiation impasse between Johnson and the City Council had "impeded decision timeliness and the development of a credible and comprehensive plan to restore structural balance."

That news came at the same time credit agency Kroll Bond Rating Agency (KBRA) made a similar decision to downgrade the city. The agency downgraded Chicago's rating to BBB-plus from A-minus, and added that it's outlook for Chicago is negative.

KBRA said that its downgrade is due to the city's deteriorating fund balance, narrowing liquidity, and high and rising fixed cost burden, adding, "These pressures limit financial flexibility and may impair the city's ability to sustain advance pension contributions intended to stabilize the net pension liability and maintain progress along its statutory pension funding ramp."

Civic Federation President Joe Ferguson blasted city officials for Johnson’s financial disaster. In a statement, he said, "The Civic Federation takes no pleasure in yesterday's news that two rating agencies have downgraded the City's credit rating. A credit downgrade is not just symbolic; it indicates real financial consequences and long-term ramifications for not just the City but its residents."

The $500 million in taxable bonds for the firefighters is just one more example of the massive troubles city finances face. The costs are being forced on the city by a union agreement making pay retroactive.

"Those are expenditures that happen, and you pay for it with higher taxes or reallocations from other parts of the budget. The city administration has decided to pay for this by borrowing the money," said DePaul University Economics Professor Thomas Mondschean, according to The Center Square.

But the credit downgrades are only acerbating the problems as they just hurt all the more going forward.

"It doesn't affect the debt that is already outstanding until they decide to refinance it. But going forward, a lower bond rating means you have to pay a higher interest rate on whatever you're borrowing when you issue a bond," Mondschean explained.

The city will continue to suffer higher budgetary expenses both because of the additional debt and the higher interest rates on that debt.

But this is nothing new for this disastrous mayor. Not only has Fitch and KBRA downgraded Chicago's ratings, the S&P Global Ratings took similar actions in 2025. So, Johnson should be well familiar with credit downgrades vexing the city.

Despite all this Johnson continues to lose battles with the City Council to impose ruinous taxes on the city (thankfully so) without making any meaningful budget cuts or otherwise reorganizing government to reverse the spiraling expenses. And the credit rating agencies know that his failures are driving the city to bankruptcy. They have no choice but to assign their ratings accordingly.