CRAIN’S CHICAGO BUSINESS / Staff
In a bit of good news for Chicago taxpayers, a new cash investment strategy by City Treasurer Kurt Summers appears to have paid off, with the city earning $45 million-plus more than it did last year.
In a statement and an interview, Summers, who took over in October 2014, said investing idle cash earned $15.5 million in 2014 for the city’s operating or general fund. But shifting from low-paying 6- to 12-month securities to one- to two-year paper has almost quadrupled the yield, from 65 basis points to 2.25 percent.
As a result, the city already has booked $42 million for the general fund at midyear and should hit $68 million by the end of the year, counting only interest and not any trading profits, Summers said.
Adding in growth in other funds, total earnings should grow to at least $102 million by Dec. 31, up from $57.9 million in 2015 and $49.7 million in 2014.
Summers—whom City Hall insiders consider highly likely to run for mayor in 2019 if incumbent Rahm Emanuel does not—said taxpayers deserve to know about the small windfall as the City Council decides whether to approve property tax rebates for some homeowners and, if so, how much.
“We knew there was an opportunity, and we knew it was large,” said Summers. But the new strategy has worked out better than he expected, he said.
Overall, the city has about $6 billion in cash reserves at any one time. Much of it is in the form of required debt-retirement reserves, some from semiannual property taxes and other receipts that have been received but not yet spent.
Update — Summers’ windfall has caught the eye of Ald. Carlos Ramirez-Rosa, 35th, who is quite interested in using the proceeds to expand Emanuel’s proposed property-tax rebate to cover renters.
“I’d still like to go over the figures with Summers,” Rosa said. “If it is a reliable source of money, absolutely, let’s expand it to renters.”
Emanuel’s plan may come up for a committee vote later today. I’ll keep you posted.