S&P Global downgrades Chicago’s credit rating after budget passage

S&P Global downgraded the City of Chicago’s credit rating after the passage of the 2025 budget last month.

Credit downgrade

What we know:

The rating agency knocked the city’s rating from BBB+ to BBB, according to a city news release.

The downgrade comes after the City Council passed a 2025 budget without a property tax increase to close a nearly $1 billion deficit.

Instead, Mayor Brandon Johnson’s office relied on other measures like a $40 million line of credit, $10 million in special event reimbursements, $5 million in gas and electricity savings and $1 million in staff cuts across city departments. There were also several fee increases to raise revenue.

Why you should care:

Credit downgrades are important because they could make borrowing money more expensive in the future.

The rating is like the city’s credit score, meaning lenders use it to determine how much to charge the city to take out a loan.

The city uses taxpayer money to pay back such loans as well as the interest payments.

Chicago Mayor Brandon Johnson presides over a Chicago City Council meeting at City Hall on April 17, 2024. (Eileen T. Meslar/Chicago Tribune/Tribune News Service via Getty Images)

‘We do not agree’

The other side:

Chicago officials argued the credit downgrade doesn’t reflect the city’s financial outlook.

Johnson’s office pointed to the city’s economic output, which is "larger than most countries."

The Johnson administration also pointed out that S&P commended the city for its $272 million advance pension payment in its 2025 budget.

What they're saying:

Johnson said despite the downgrade, the city will continue to meet its fiscal challenges "head-on."

"The S&P report focuses on the fiscal challenges we face, but it does not accurately reflect our fundamental economic strength and the steps we’ve taken to address legacy issues. My administration remains committed to working collaboratively with the City Council to achieve structural balance and strengthen Chicago’s financial future," he said.

Jill Jaworski, the city’s chief financial officer, said the administration is confident in the city’s economic outlook.

"We do not agree with this rating adjustment, as it does not accurately reflect the strength of the City’s credit. We have taken deliberate steps in recent years to stabilize pension funding and maintain strong liquidity. Moving forward, our administration will continue to prioritize structural reforms and collaborative solutions that ensure Chicago’s financial resilience," she said.

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