Mayor Rahm Emanuel on Monday sloughed off a threat by Moody’s Investors Service to drop Chicago’s bond rating even further into junk territory because of the mayor’s commitment to do whatever it takes to ensure an on-time opening of the Chicago Public Schools.
“Standard & Poor’s and Fitch have upgraded the city of Chicago,” Emanuel said. “So I don’t really put much stock in Moody’s.”
Last week, Moody’s delivered a double-whammy to Chicago taxpayers that could drive up already exorbitant borrowing costs for the city and its public schools.
The Wall Street rating agency that stands alone in its junk-bond rating of Chicago’s debt placed both CPS and the city under review for another possible downgrade — even after Illinois lawmakers overrode Gov. Bruce Rauner’s veto of a budget balanced, in part, by a state income tax increase.
For CPS, the reason for Moody’s review was the state’s “ongoing failure” to help finance school operations and Rauner’s threat to veto a revamped school financial aid formula that would add close to $300 million in additional state funding for CPS and potentially more in subsequent years.
For city government, the reason for Moody’s review was Emanuel’s promise to bridge whatever funding gap still exists to make certain that Chicago Public Schools open on time and remain open.
On Monday, Emanuel continued to play poker with his plan to tax downtown businesses and high-net-worth individuals to put the broke Chicago Public Schools on solid financial footing.
Emanuel said he would wait until Rauner vetoes the school-funding bill — and the General Assembly votes on whether to override that veto — before identifying a local source of revenue to generate the annual revenue that CPS desperately needs.
In other words, the mayor doesn’t want to show his hand now and let Springfield off the hook.
“I would hope that all Democrats and Republicans come together, as they did last week, to work in making sure that . . . poor children — urban, suburban and rural children — are treated equally when it comes to funding education,” Emanuel said.
Emanuel was asked repeatedly how he plans to bridge the gap between what CPS gets from the state and the $400 million-to-$600 million the broke system needs to be put on solid financial footing.
“What I’m gonna do is make sure that . . . the re-write of the funding formula which benefits school districts with poor children and children of color becomes the law,” he said.
The mayor stayed on message, even after being reminded that CPS will still need help from the city even if Rauner’s threatened veto of the school funding bill is overridden.
Rauner has branded the rewrite of the school funding formula a CPS bailout. On Monday, the governor’s office refused to comment on the mayor’s remarks.