Borrowing $350 million for police settlements would cost about $190 million in interest, Chicago's CFO tells alderpersons

At the first full budget hearing, members asked about the bond's cost, the head tax's 'Plan B' and the lease tax freeze. Our records show the last borrowing ordinance passed 39-11, and this one needs only 26 votes.

By Chicago PoliticsUpdated Oct 27, 2026

Alderpersons question the City's finance team at the Committee on the Budget, Oct. 26, 2026City of Chicago video

On the first full day of hearings on Mayor Brandon Johnson's 2027 budget, alderpersons asked what it would cost to borrow for police misconduct settlements. The City's new chief financial officer gave them a number: about $190 million in interest on a $350 million bond.

Why it matters: the City is proposing to borrow up to $480 million to pay settlements and judgments, much of it for the Reynaldo Guevara wrongful-conviction cases the Council approved this month. Borrowing spreads that bill over years of payments, and the bonds would be backed by a property tax levy, as we reported when the plan was introduced.

What happened Monday

The Committee on Budget and Government Operations, chaired by Ald. Jason Ervin (28th), questioned Acting Budget Director Jonathan Ernst, Chief Financial Officer Ashlee Gabrysch and Comptroller Michael Belsky for most of the day. Video, the transcript and our notes are on the meeting page.

The cost of the borrowing. Gabrysch said in her opening statement that the bonds would be paid off in five to seven years with level payments, and contrasted that with settlement bonds from earlier administrations that ran 12 and 30 years (watch at 1:10:02). Asked by Ald. Samantha Nugent (39th) what the City would owe, she said a banking partner estimated an all-in rate of 6.923% on a $350 million taxable bond, or about $190 million in interest over seven years (watch at 4:41:03). She said the figure depends on market rates when the bonds are sold. Ald. William Conway (34th) asked her to walk through the structure (watch at 5:30:54).

Fox 32 reported a Finance Department estimate of more than $139 million in interest at the same rate. The two figures may count different things, such as issuance costs and the length of the bonds; the $190 million figure is the one given at the hearing.

No unused settlement authority. Ald. Andre Vasquez (40th) asked whether the City could draw on borrowing it had already approved. A finance official said the City has no unused authority to borrow for settlements and judgments, though it has other unused general obligation authority (watch at 4:52:20).

"Plan B." Ald. Anthony Beale (9th) asked what happens if the head tax fails again (watch at 1:30:23). The administration said it would work with the Council, the Sun-Times reported, noting that 29 alderpersons have signed a letter opposing it.

Ratings. Ald. Brendan Reilly (42nd) said the budget repeats concerns Fitch Ratings cited when it downgraded the City in February, and asked Gabrysch, who once worked at Fitch, what outlook she would give it (watch at 1:49:31). She pointed members to the risk factors in the published rating reports.

The lease tax. Ald. Nicole Lee (11th), the committee's vice chair, called the proposed lease tax increase "just an insane amount" and asked what happened to last year's promise not to raise it before 2028 (watch at 2:23:31).

More settlements coming. Ervin said the recent global settlements were somewhat of an anomaly, "with probably one to two more to go" (watch at 2:00:26).

What our records add

Borrowing votes have split the Council before. The 2026-2027 general obligation borrowing ordinance, which also covered settlement costs, passed 39 to 11 in December 2025.

How each ward voted

39 yea, 11 nay · Dec 19, 2025 · Passed

Yea Nay

O2025-0021097: the roll call, the timeline and the documents

This bond needs 26 votes, not 30. Ald. Marty Quinn's rule requiring 30 votes for City debt passed 32 to 15 in September, but the Mayor's veto stood when the override got 33 of the 34 votes it needed, as we reported.

Where the bond is. The $480 million bond ordinance (O2026-0029650) is in the Committee on Finance, chaired by Ald. Pat Dowell (3rd).

What's next

Department hearings continue through Nov. 10; the full schedule is in our hearing guide. The Police Department and Department of Public Health are up Wednesday, Oct. 28. The Council's public hearing on the budget is Dec. 8, and a budget must pass by Dec. 31.

Sources: Chicago Politics: Oct. 26 hearing transcript; WTTW: Chicago financial officials defend plan to hike corporate taxes, borrow $481M.