Mayor Lori Lightfoot’s office recently announced Chicago’s investment rating by Moody’s Investors Service was boosted for the first time in 12 years.
The mayor said the upgrade is evidence of the city’s financial bounceback after the pandemic and points to a growing economy in the future.
"When we started this work ago, we faced the largest budget gap in the city’s history," Lightfoot said in a statement. "Now, nearly four years later, the city is financially stable and on a path toward economic recovery. Hard work pays off and my administration has done the difficult work of finding efficiencies and putting in place structural solutions to be able to begin paying down our debt, boosting reserves, and paying down the pension credit card, all while making historic investments in the city of Chicago.”
Moody’s has upgraded Chicago’s General Obligation (GO) Debt to a Baa3 rating, Lightfoot said in the release. It was upgraded from Baa1 to Baa3, demonstrating the city’s capability to balance debt and finances. Additionally, Moody’s upgraded the city’s water bonds, adding 10 credits in the past three months. The press release states such upgrades will save the city $100 million for every $1 billion borrowed.
“The City’s 10 upgrades from independent rating agencies and investment grade ratings across the board is external proof that the City has turned around its finances,” Jennie Huang Bennett, the city's chief financial officer, said. “These upgrades are evidence that the City’s financial strength is not just focused in one or two areas but rather the financial improvements are being acknowledged across the city as a whole.”
Moody’s acknowledged Chicago’s stable financial situation in regard to pension funding, as the city slowly pays off the city’s “pension" credit card.
"Adoption of the [new pension funding] policy follows the elimination of a number of other debt-based budget relief maneuvers that Chicago had relied on, marking a decisive shift away from an era where the city balanced budgets at the cost of a deteriorating balance sheet," Bennett said.
Moody’s announced the upgrade and said, “Chicago has substantially increased its pension contributions and enacted numerous revenue increases, materially reducing what had been a massive structural operating deficit. With the adoption of its fiscal 2023 budget, the city has implemented a new policy that calls for, at a minimum, pension contributions from growing.”
Alderman Scott Waguespack, chairman of the Committee on Finance, congratulated Lightfoot and called the upgrade a “milestone.”