Chicago's financial stability depends on having a strong financial team leading with openness and transparency and taking their fiduciary duty seriously. This morning, news broke that the Chief Financial Officer of the City of Chicago abruptly resigned. CFO Gabrysch's appointment was important because she brought with her significant municipal financial experience and a willingness to work together to improve Chicago's finances. I was confident in her approach to governing on finances, and she was, above all, acting with great integrity and following through on her fiduciary obligations to the people of Chicago.
Unfortunately, she is the third CFO to leave in less than a year, and the city still has no permanent budget director. For years, Chicagoans have had good reason to question whether this administration can manage the city’s finances. They can't, and our credit ratings dropped because of this fiscal mismanagement. Now they may have crossed into fiscal malfeasance.
Earlier this year, the Johnson team blocked Aldermen from getting information on the parking meter deal via an NDA, and we were forced to renegotiate the deal separately from the Administration. We obtained several benefits from the amended deal, including a transfer fee of $75 million. We met with the Mayor and CFO Gabrysch, among other Johnson staff, and told him the $75 million would go to pay down our pension obligations. The Mayor now claims she acted inappropriately by signing off on the pension payment.
Days later, in her first budget hearing, Gabrysch countered the Mayor's claim that 76% of his budget plan was structural, testifying at Council hearings that it was 56%. When questioned about this, she reiterated the facts and did not mislead the Council but apparently angered the Administration. The SEC has previously intervened on similar municipal malfeasance in Miami.
While a majority of members of the City Council are opposed to the Mayor's budget, we have worked to find efficiencies and spending cuts before asking for any increase in taxes. We have questioned department heads and been met with obfuscation when we ask about the financial irregularities in the $ 100s of millions in requested appropriations. The Ernst and Young efficiencies report has been met with scorn despite taxpayers paying almost $10 million for the report. Coupled with the $75 million payment, the structural budget concerns, and recent downgrades to our credit, the CFO was trying to straighten the ship.
The damage done to the City finances is worsening by the day and this latest resignation does not bode well for our fiscal outlook. The Mayor's response to her resignation is also an unfortunate attempt to undermine her great work and smear her- don't fall for it.
We will be asking for an independent audit and are asking David Glockner (the Chicago Inspector General) to investigate. Glockner is a former US Attorney and SEC investigator, which would complement the investigation. While we gather more information, we will take actions necessary to protect taxpayers, including public hearings in the Committee on Finance.