- Chicago Mayor Brandon Johnson’s administration requested a 3% discount from city contractors to address financial challenges. The request follows a budget that raised taxes on streaming services, parking fees and paper bags to close a nearly $1 billion deficit.
- The city faces additional pressure from a $175 million pension payment owed by Chicago Public Schools. There are potential risks to its bond market standing if reserves are used to cover the shortfall.
- Chicago’s reliance on $4 billion in federal funding is under threat after the Trump administration froze aid programs. Some raised concerns about potential funding cuts for cities with policies opposed by the administration.
Full Story
Chicago passed a budget that included increased taxes on streaming services, parking fees and paper bags to close a nearly $1 billion budget hole. Now, Mayor Brandon Johnson’s office is asking businesses with contracts with the city to give it a 3% discount on their agreed rates.
In a letter posted to social media by Alderman Raymond Lopez, Chief Procurement Officer Sharla Roberts says the city faces new challenges in reducing costs and allocating resources.
“The City has an obligation to taxpayers to pursue all avenues involving cost cutting measures. Vendors doing business with the City are no exception,” Roberts said. “Therefore, the City requests a price reduction of minimally 3% off all invoices sent to the City for the next 12 months off any contracts you currently hold as a prime contract with the City.”
Roberts didn’t elaborate on the “difficult economic times” that spurred the request. She gave contractors who received the letter five business days to respond with what kind of lowered rate the city would get.
According to the Chicago Sun-Times, all main contractors the city does business with received the letter.
More budget trouble?
The mayor’s office has yet to comment publicly on the letter. Chicago’s latest source of budget anxiety is a $175 million pension payment owed by Chicago Public Schools. Due on March 30, the city would face the difficult decision to pull from its reserves if the district can’t come up with that money.
Doing so could upset the bond market, which the city needs to improve its standing in order to access low-interest loans. Credit rating agency S&P Global Ratings downgraded Chicago’s general obligation bond rating from BBB+ to BBB in January, two notches above “junk bond” status. The agency noted that the city has adequate fundraising capacity but is vulnerable to “adverse economic conditions.”
Trump factor
Another budgetary threat could come from Washington, D.C., in the form of federal funding cuts.
The city’s budget director said in January that Chicago receives approximately $4 billion in federal funding for various departments and services.
On Jan. 27, the Trump administration froze many federal aid programs. While the move was blocked in court, it left state and local officials wondering if the president would find a way to pull funding from areas with policies he disagreed with.
