Community organizers and Ald. Rossana Rodriguez (33rd) have called on the feds to investigate the city’s use of COVID-19 relief funds claiming the mayor’s office wrongly allocated money to pay down debt instead of helping the residents it was intended for.
Saqib Bhatti, co-executive director of Action Center on Race and the Economy, accused Mayor Lori Lightfoot of siphoning off hundreds of millions of dollars to large banks rather than investing in public health and safety which would’ve helped the city brace for the emergence of the Omicron variant. This lack of foresight, he said, is the reason schools are closed right now.
“The mayor decided to lock children and teachers out of their classrooms rather than assure that their school buildings were safe.” Bhatti said. “I use the word decided intentionally. This is a choice that Mayor Lightfoot made when she decided to give our COVID relief money to JP Morgan Chase and other investors.”
The city was allocated $1.9 billion in federal relief funds through the American Rescue Plan which was created to ease the economic blow that the COVID-19 pandemic had on cities and states across the country.
Lightfoot’s original plan called for using more than half of that to pay off $465 million in scoop-and-toss debt and cancel plans to borrow $500 million more.
That plan drew criticism from some City Council members, and when Treasury Department guidelines issued in 2021 nixed that idea, the mayor’s financial team devised an end-run.
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Instead, the mayor used hundreds of millions in relief funds to replace revenues lost to the pandemic in 2020 and 2021. That freed up other corporate fund revenues, and that money went toward retiring refinanced debt, often called “scoop-and-toss” because it scoops up existing debt and, by stretching out the payments, tosses that obligation further into the future.
Last week, the U.S. Treasury Department issued its final ruling that states or cities can’t use these funds to pay off debt.
“Here’s the thing — Mayor Lightfoot, she already did it,” Bhatti said. “She put off spending the COVID money for half a year, hoping the federal government would change the rules. Our schools and communities lost precious time because the mayor was holding out hope that she would get permission to give our recovery money to America’s largest banks.”
The mayor’s office didn’t immediately respond to a request for comment.
Bhatti wants the federal government to step in and “claw back our money” from those banks and make the city use the funds properly.
Rodriguez said she and some of her City Council colleagues opposed the 2021 budget amendment “that would facilitate $1 billion to go to Chase bank and law enforcement.”
She added: “Right now as we see this crisis unfold in CPS, we know that the city could have been investing in a lot of different mitigation strategies — for example, testing centers that are run by the Chicago Department of Public Health.”
