Mayor Lightfoot refinancing city debt to save $200 million from city's budget shortfall

CHICAGO (WLS) -- Mayor Lori Lightfoot's office announced Monday plans to refinance $1.3 billion in city debt, to save $200 million, which would help shrink an $838 million budget shortfall.

In a statement, the mayor's office said they city will issue general obligation bonds and sales tax securitization bonds to refinance $1.3 billion in existing general obligations and motor fuel tax bonds.

The city compared the move to refinancing a mortgage, saying the new bonds would be issued at lower interest rates to replace the outstanding ones.

"Since my first day in office I have made responsible stewardship of taxpayer dollars a priority in every financial and budgetary action we have taken," Lightfoot said. "Today's announcement represents the latest step in creating millions of dollars in smart savings for Chicago's residents, allowing us to strengthen our financial footing and better focus on delivering the investments and services that will allow our city to grow and thrive."

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The refinancing is pending approval by the City Council; if approved Lightfoot's office would issue the bonds as early as December.

The mayor's office said the city won't take the risk of borrowing money to pay for settlements, issuing pension obligation bonds, drawing down on financial reserves, or relying on scoop and toss borrowing financing tactics.

Mayor Lightfoot will present the city's 2020 budget to City Council on Wednesday.