Chicago voters will choose between Paul Vallas, a former city budget director and Chicago Public Schools chief, and Cook County Board Commissioner Brandon Johnson to replace Mayor Lori Lightfoot who lost her bid for a second term as the city’s upward fiscal momentum took a backseat to worries over crime.
Vallas won 33.9% of the vote followed by Johnson with 20.3% with 98% of ballots counted. Lightfoot trailed the two with 16.9% in a nine-person, non-partisan contest. Since no one candidate secured a majority, the two top vote-getters face off in an April 4th runoff. The victor takes office in May.
The mayor runs a city that operates on a $16.4 billion all-funds spending package including a $5.4 billion corporate fund and is home to 2.7 million residents.
“I’m grateful for the millions of Chicagoans who came together as we made tough decisions, saw the struggles of our frontline workers, and beat back a deadly pandemic,” Lightfoot said in a message to voters. “I’m grateful that we were able to invest in communities that had been neglected for decades with our INVEST South/West program, putting over $2.2 billion in commitments into our neighborhoods. And you better believe I am grateful that we took on the machine and put this city on a better path.”
Lightfoot, then a corporate lawyer who had led the police board but never had held elected office, made history in 2019 as the first openly gay, black female mayor when she swept into office on promises of reform after besting Cook County Board President Toni Preckwinkle in a run-off.
Lightfoot replaced Rahm Emanuel who did not seek a third term. Her loss in Tuesday’s race makes her the first incumbent to lose office since Jane Byrne failed to win a second term in 1983.
Lightfoot inherited an $838 million budget deficit and rising pension payments as the city was ramping up to actuarially based contributions. The COVID-19 pandemic then struck, dominating the city’s economic landscape and, at least initially, set back the city’s course to make further progress stabilizing its fiscal health.
As the economy recovered and the city received an infusion of federal pandemic relief including $1.9 billion of American Rescue Plan Act aid, the city was able to honor pledges not to return to one-time maneuvers like scoop-and-toss debt restructuring.
The city trimmed its red ink to $128 million heading into 2023 — from more than $800 million a year earlier — with pandemic relief providing a cushion, more than $1.2 billion in structural reforms taking hold, and strong revenue collections.
The administration averted aldermanic pressure to use reserves during the pandemic and modest deposits have lifted them to a $1.1 billion peak. The city has paid down $747 million of debt since 2019 and is now amortizing $300 million to $400 million annually, paving the way for borrowing to support a $5.3 billion five-year capital program and $660 million to fund the $1.2 billion COVID Chicago Recovery Plan.
Lightfoot secured state legislative changes to allow the city’s first casino license to lure a developer and expects at least $200 million in new revenue that must be directed toward public safety pension contributions once the casino is up and running in the coming years. The city also struck a long-term contract to sell treated Lake Michigan water to Joliet for $1 billion.
“We’ve gotten the city back on a proper financial footing and we are building a Chicago where everyone has the opportunity to participate in the wealth of this great city,” Lightfoot said last month in an address on the city’s finances to the City Club.
The city now makes actuarially based contributions and this year launched a new policy directing supplemental contributions — $242 million in 2023 — with the goal of staving off investment sales to meet annuity obligations.
The fiscal momentum won a round of upgrades most notably from Moody’s Investors Service that lifted the city’s general obligation rating out from junk in November, raising it to Baa3 from Ba1.
Fitch Ratings in October raised the city’s rating to BBB from BBB-minus and assigned a positive outlook while Kroll Bond Rating Agency and S&P Global Ratings revised their outlooks on their respective A and BBB-plus ratings to positive.
The city’s fiscal team that has overseen the upward trajectory is led by Chief Financial Officer Jennie Huang Bennett, a former public finance banker who is well-respected by the municipal market community. Budget Director Susie Park and Comptroller Reshma Soni round out the leadership team.
New mayors have typically hand-picked their finance team, whose members enjoy cabinet status, while the rank-and-file of the offices typically remain in place during mayoral transitions.
The mayor’s reach extends to key sister agencies, with appointment powers over leadership positions of the Chicago Park District, Chicago Transit Authority, and Chicago Public Schools — although the latter is moving in the coming years to an elected board. The CTA and its fellow suburban transit agencies face a looming 2026 $700 million fiscal cliff and concerns of dirty, unsafe and unreliable trains and buses.
The mayor appoints some members to the Illinois Sports Facilities Authority and Metropolitan Pier and Exposition Authority.
While on the fiscal upswing and no longer carrying the taint of a junk rating, the new mayor will come into office amid warnings of a possible recession that could sink some revenue streams and will inherit a burdensome $33.7 billion net pension liability tab with weak funded ratios in a range between 21% and 46%. Budget gaps of $474 million are projected in 2024 and $554 million in 2025, according to the last annual financial analysis.
The new mayor also will face the loss of the National Football League’s Chicago Bears to the suburbs and a decision on whether to undertake costly renovations to Soldier Field with or without the Bears.
Lightfoot ran afoul of voters concerned over crime levels that, while improving on some fronts, has still rattled the populace and criticism that she has not made good on promises to improve transparency and work collaboratively. She battled with the Chicago Teachers’ Union over a new contract and COVID policies. Her hard-edged temperament alienated even a handful of her own City Council committee leadership.
Vallas versus Johnson
Vallas and Johnson represent opposite sides of the political spectrum with Johnson labeled a progressive and Vallas known as a more conservative Democrat. Johnson enjoys the financial backing of the Chicago Teachers’ Union while Vallas received the endorsement of the Fraternal Order of Police.
The two offer differing visions of the city when it comes to finances.
Vallas, 69, served as a revenue director and budget director under former Mayor Richard M. Daley who then tapped him to serve as the chief executive officer of the Chicago Public Schools after the state handed control of the system back to the city in 1995. In 2001 he left to take over Philadelphia schools and later took on a similar role in New Orleans.
Vallas supporters say his fiscal and school leadership rebuilding the district’s finances, buildings, and academics make him a good candidate to manage the city. Critics say his record at CPS is mixed as the district took on billions of debt, diverted some pension dollars for operations as was legally permitted at the time, opened the door to private charter schools, and saw varied academic results. Vallas lost prior races for mayor, lieutenant governor, and governor.
“Public safety is the fundamental right of every American,” Vallas said in his post-election speech. “It is a civil right, and it is the principal responsibility of government. We will have a safe Chicago, and we will make Chicago the safest city in America.”
Johnson, 46, was elected to the Cook County Board of Commissioners in 2018 and is a former CPS teacher who is an organizer for the CTU. He backed moving to an elected board under legislation signed by Gov. J.B. Pritzker in 2021.
Johnson went on the attack during his post-election speech. “We have shifted the political dynamics in this city,” Johnson said going on to call Vallas a Republican portraying himself as a Democrat. “He has literally failed everywhere he has gone. We cannot have this man as the mayor of the city of Chicago.”
A Chicago SunTimes questionnaire laid out where they agree and where they diverge.
Both said they would reverse the Lightfoot-backed inflation-related annual increase in property taxes approved in 2021 and both committed to maintaining statutory pension contributions even in the face of fiscal downturn, and both would scrap Lightfoot’s signature INVEST South/West economic program.
Johnson would set aside funds to continue guaranteed income programs, Vallas would not. Johnson also supports broadening the city’s sales tax to cover professional services while Vallas does not. Johnson supports a hike in the tax on real estate transactions over $1 million to fund homeless programs, Vallas does not. Vallas supports closing under-enrolled schools after a moratorium ends in 2025, Johnson opposes such action.
Vallas believes CPS should be completely financially independent of the city once the move to an elected board takes place while Johnson says it shouldn’t.
Vallas supports selecting the next police leader from within while Johnson said all options should be on the table. Neither supports spending public funds to renovate Soldier Field in an effort to keep the Bears.
Johnson has laid out a fiscal blueprint that calls for raising $800 million in new revenue by implementing a surcharge on suburbanites traveling into the city for work, reinstating the head tax on employees of large companies that perform more than 50% of their work in Chicago, imposing a jet fuel tax, raising the real estate transfer tax, raising the hotel tax, and making permanent an annual transfer of $100 million in TIF surpluses to the budget.
Johnson also wants to impose a transaction tax on securities trades. Critics warn the city’s exchanges would relocate. Johnson was a backer of the “defund the police” movement but has since shifted to focus on backing additional investment in stopping the root causes of crime.
Johnson also lays out various management efficiencies. “The revenues and efficiencies in this plan add up to about $2 billion total to close Chicago’s current $1 billion structural deficit and add another $1 billion in new investments from the Better Chicago Agenda,” the plan says of his four-year timeline.
Vallas says action is needed on pensions that don’t rely on altering the state constitution to allow for cuts. He would pursue state help — something Lightfoot has pressed for to no avail — and would seek to raise returns through changes in investment decisions and dedicating the $500 million in annual city contributions to school pensions freed up by state parity payments.
Vallas would tap tax increment financing surpluses to repay a potential pension obligation bond borrowing and vows not to raise property taxes to address “the pension crisis.”
On the budget, he would create an independent budget office that serves the City Council and the public, modeled after New York City.