illi News - City Of Chicago Responds To S&P Credit Rating Adjustment

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CHICAGO ~ Chicago's credit rating has been downgraded by S&P Global Ratings from 'BBB+' to 'BBB' today, according to a press release. This decision comes after the agency had placed the city on negative credit watch, but now their outlook is stable. Despite recent public budget negotiations, S&P states that Chicago's credit fundamentals have not changed and the downgrade does not accurately reflect the city's financial strength or ability to meet its debt and pension obligations.

The Chicagoland region boasts a larger economic output than many countries and has seen steady growth for decades. In fact, the labor force in the area has increased by over 10,000 between October and November of 2024, making it the largest labor force in at least 10 years.

This economic strength is evident in several major development projects currently underway in Chicago. These include the Illinois Quantum and Microelectronics Park on the south side of the city, which is supported by both PsiQuantum and the Department of Defense. Other projects include the expansion and redevelopment of O'Hare International Airport through the Terminal Area Plan, as well as revitalization efforts around the United Center and the Obama Presidential Center. Additionally, a recent $2 billion federal funding secured for the expansion of Chicago Transit Authority's Red Line Extension Project will provide improved transit times for residents on the south side.

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According to World Business Chicago, there were 118 pro-Chicago decisions made in 2024 alone, with 57 taking place within city limits (including 10 on the south and west sides) and 61 in surrounding suburbs. These projects demonstrate Chicago's commitment to economic growth, job creation, and global competitiveness.

In response to S&P's report, Mayor Brandon Johnson stated that while it focuses on fiscal challenges faced by the city, it does not accurately reflect its strong economic foundation or efforts made to address legacy issues. He reassured that his administration remains committed to working with the City Council to achieve structural balance and strengthen Chicago's financial future.

Despite the challenges outlined in S&P's report, the city's stable outlook is a result of its reserves, proactive pension-advance policy, and resilient local economy. The agency commended Chicago for its consistent and responsible approach to addressing fiscal pressures. In particular, S&P praised the city's decision to maintain a $272 million advance pension payment during budget negotiations in 2025, stating that it is "essential for fiscal stability" and reduces the risk of further long-term budgetary challenges.

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Chief Financial Officer Jill Jaworski echoed this sentiment, stating that the city has taken deliberate steps in recent years to stabilize pension funding and maintain strong liquidity. She also expressed confidence in Chicago's vibrant economy and commitment to fiscal responsibility as guiding factors through these challenges.

The Johnson Administration is dedicated to promoting transparency, collaboration, and innovative solutions to strengthen Chicago's financial foundation and ensure a sustainable fiscal future. With a track record of prioritizing structural reforms and collaborative solutions, they are confident in their ability to guide the city through these challenges.

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