CHICAGO — Mayor Brandon Johnson wants to take out $283 million in loans to pay for police settlements, but his plan has left aldermen wondering how a lot of the money will be spent.

The borrowing proposal revives a practice past mayors discontinued and derided as financially reckless. While members of the City Council raise concerns and questions, Johnson’s team is defending the move as a way to finally clear a backlog of looming police misconduct lawsuits and save money.

“The Department of Law has been very focused on settling cases and lowering our costs by getting them settled quicker,” Johnson’s chief financial officer, Jill Jaworski, told aldermen Monday. “Instead of increasing those costs all in the budget this year and spiking up our expenses, we’re spreading that out over a five year repayment period.”

The plan would spread the $283 million in settlements over five years, starting in 2027 and ending in 2031. It would also force the city to pay an additional estimated $42 million in interest, according to the Johnson administration.

A $90 million chunk of the borrowed money would pay for the so-called global settlement to resolve almost 200 wrongful conviction lawsuits involving disgraced police Sgt. Ronald Watts, according to a statement shared by the Law Department and Jaworski’s office.

But it remains unclear how the remaining $193 million would be used, an omission aldermen say makes them fear Chicago is taking a financial misstep as City Hall slowly crafts a 2026 budget.

One possibility, said Northwest Side Ald. Scott Waguespack, 32nd, is that the money would go toward another global settlement to resolve the around 40 remaining cases involving disgraced Detective Reynaldo Guevara. The handful of Guevara cases already settled by the City Council have cost around $10 million each, an ominous portending of the exorbitant price Chicago will likely pay by settlement or verdict, now or later.

City officials might also be planning to use the money to pay off the record-setting costs of settlements approved by aldermen this year, said North Side Ald. Andre Vasquez, 40th. Aldermen have approved over $258 million in settlements in 2025, a massive total that towers above past high marks — and dwarfs the dollar figures underlying some of the city’s most contentious budget fights, like Johnson’s controversial $100 million corporate head tax.

That 2025 sum excludes the $90 million Watts settlement, a $120 million pair of wrongful conviction verdicts the city is appealing and an array of smaller settlements that don’t require aldermanic approval. It is also likely to rise further before the end of this year.

City officials declined to comment on the possibility of a Guevara global settlement. Their statement said the $193 million “will be used for settlements approved and expected to be paid in 2025 and 2026,” but they did not answer questions about what types of settlements, or whether it will go toward specific cases.

There’s a big difference between using the money to pay for global settlements and using it to pay for the individual settlements Chicago approves monthly, said Ralph Martire, executive director of the Center for Tax and Budget Accountability, a nonpartisan fiscal policy think tank.

The oft-approved individual settlements have become more like an operating cost for the city as they regularly pass through the City Council and onto the city’s ledger.

“You never want to be incurring debt to cover operating costs, just as a general principle,” said Martire, whom Johnson named to his budget working group in May. “That’s Fiscal Policy 101.”

But the global settlements are more akin to an “exceptional, one-time” liability, he said. And if the city paid them off in one year, it would have to take money out of basic services, like policing, firefighting or street maintenance, to cover the cost, he said.

For cash-strapped Chicago, there are not a lot of “fun options” to plug long-term holes or respond to expensive challenges, Martire added.

“It’s still not ideal, right?” he said. “It gets to the bigger picture that the city does need structural revenue reform, and that’s very difficult to accomplish.”

The $42 million in interest would be better spent to shore up underfunded pensions or bolster violence prevention programs, Ald. Matt Martin, 47th, said. Because many of the lawsuits have been expected for years, the interest costs could have been avoided by using better planning to pay more quickly, he argued.

“We don’t need to send that money to banks if we can avoid it,” Martin said. “It’s really challenging for me to go to my community and say, ‘I think we should spend $42 million on interest payments alone for costs that we knew were coming.’”

To hold the department accountable, the city should budget for the actual amount it expects to spend on police-related settlements in its police budget, Martin said. Chicago has overspent on its police settlement budget in all but two years since 2010, according to a Tribune analysis. Johnson’s 2026 spending plan proposes $82.6 million be budgeted to cover police-related lawsuits, the same amount that has been budgeted since 2020.

Martin praised former Mayor Rahm Emanuel for weaning the city off its old practice of borrowing to pay for police settlements. He also credited former Mayor Lori Lightfoot for continuing the practice. Lightfoot slammed the debt for settlements as a “bad borrowing practice” in her final midyear budget forecast.

Still, Martin said he supports the city’s pursuit of more global settlements. City Council members, including Johnson’s most committed opponents, broadly praised the Watts deal as a smart, money-saving move.

Martin hopes the Johnson administration’s plan to more quickly resolve long-standing lawsuits will “bend the cost curve.” Johnson’s administration in its statement predicted costs will be concentrated over the next two years, but “settlements and judgements will return to being within the budgeted levels” after the spike.

The Law Department is weighing global settlements and created a division specialized in resolving old, potentially high-cost lawsuits, the statement added.

Waguespack, often a Johnson critic, said he is frustrated by the lack of clarity on how the borrowed money would be spent. But, like Martin, he supports the global settlements approach. He believes it is being used to settle the Guevara cases.

Waguespack, 32nd, said he can understand why the Law Department might stay tight-lipped publicly on its plans: Nodding to a future global settlement could give attorneys bargaining against the city an advantage in high-stakes negotiations. But he wishes aldermen could get details about Johnson’s intentions in confidential meetings.

“It’s hard to find trust when you can’t get the documents until the last possible second,” he said.

And Vasquez, chair of the aldermanic Progressive Caucus, shared similar concerns about a lack of communication over the borrowing plan.

“I need more insight, more transparency,” Vasquez said. “When the budget gets presented as us being taxing the rich to get all this revenue, then why are we creating larger deficits and larger debt on the other side of it?”

The two got only limited details during the Monday hearing, when Jaworski argued the city’s efforts to decisively resolve cases were creating a temporary “extraordinary cost.” While it would take five years to pay off the debt, it would also take five years to settle many of the involved cases at the city’s normal pace, she said.

Settlements are typically an “operating cost” because they occur every year, she said.

“This is more one time because of the size and the nature of it,” she said.

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