A Bold Plan to Tackle Chicago’s $38 Billion Debt with Blockchain Innovation

Chicago, IL – August 3, 2025 – Chicago faces a daunting $38 billion debt, a burden that includes $3.4 billion owed by the Chicago Transit Authority (CTA), critical to keeping our city moving. To address this crisis, a groundbreaking proposal, initially explored with former Governor Bruce Rauner, aims to revolutionize debt management using blockchain technology. By leveraging a secure, transparent, and efficient platform called Hyperledger Fabric, this plan promises to reduce costs, rebuild trust, and pave the way for a financially stable Chicago. Here’s how it works and why it matters.

Understanding Chicago’s Debt Crisis

Chicago’s $38 billion debt is a complex challenge, broken down as follows:

• Municipal Bonds: $17 billion for city infrastructure, schools, and services.

- Pension Liabilities : $15 billion in unfunded obligations for police, fire, teachers, and municipal workers.

• CTA Debt : $3.4 billion, including sales tax revenue bonds and pension obligation payments, with a $156 million annual debt service.

- Other Obligations : $2 billion in short-term debt and contracts.

The CTA, a lifeline for millions, faces a particularly urgent crisis. With a projected $576.9 million operating deficit by 2026 due to expiring federal COVID relief funds and ridership at just 63.4% of pre-pandemic levels (289.1 million rides in 2024 vs. 449.8 million in 2017), the CTA’s financial strain threatens fare hikes or service cuts. High overtime costs and a Moody’s A3 bond rating with a negative outlook further underscore the need for innovative solutions.

A Blockchain Solution for Chicago

Enter blockchain—a technology best known for cryptocurrencies but now poised to transform municipal finance. The proposed system Hyper-ledger Fabric , a secure, permissioned blockchain designed for enterprises, to manage Chicago’s debt, starting with a $500 million pilot for CTA bonds. Here’s how it works:

• Chicago Debt Token (CDT) : Debt, like CTA’s sales tax revenue bonds, is converted into digital tokens on the blockchain, making ownership clear and traceable.
• Smart Contracts : These automated programs handle debt issuance, payment processing, and credit risk assessments, cutting administrative delays from days to hours.
• Secure Network : A network of 12 computers (nodes) operated by city officials, CTA, creditors, and auditors ensures only authorized parties access sensitive data.
• Public Transparency Portal : A user-friendly dashboard will let citizens view anonymized debt data, like CTA bond repayments, fostering trust in city finances.

Why Blockchain? The Benefits for Chicago

This isn’t just tech for tech’s sake—it’s a game-changer for Chicago’s fiscal health:

• Transparency : Real-time debt data, visible to stakeholders and citizens, builds accountability. Imagine checking CTA’s bond payments as easily as tracking a package.

- Efficiency Automated payments save time and reduce errors, critical for CTA’s $156 million annual debt service.

• Security: Blockchain’s tamper-proof records protect against fraud, ensuring every dollar is accounted for.
• Cost Savings : Improved transparency could boost CTA’s bond rating from A3 to A2, potentially saving $15 million annually on the $500 million pilot alone. Scaling to CTA’s full $3.4 billion debt could save $100 million a year, helping close the 2026 deficit.

The Plan: A 28-Week Roadmap

The proposal unfolds in three phases, starting with a pilot to tokenize $500 million in CTA bonds:

1. Planning and Development (Weeks 1-12):

   - Assemble a team of CTA, city, and blockchain experts.

   - Work with regulators, including the Illinois Department of Financial and Professional Regulation and the SEC, to ensure compliance.

   - Design and build the Hyperledger network, including smart contracts tailored for CTA’s needs.

2. Pilot Testing and Deployment (Weeks 13-22)

   - Rigorously test the system for accuracy (targeting 95% transaction success) and user satisfaction (85% among CTA and creditors).

   - Launch the pilot, issuing CDTs for $500 million in CTA bonds and monitoring real-time payments.

3. Launch and Scaling (Weeks 23-28 and Beyond):

   - Unveil a public dashboard to showcase CTA debt metrics, targeting 50,000 citizen views in six months.

   - Train 300 city and CTA officials on the platform’s user-friendly interface.

   - Expand to other city debts, like pensions, based on pilot success.

Budget and Impact

The pilot costs $4 million, with 40% ($1.6 million) for development, 30% ($1.2 million) for testing, and 30% ($1.2 million) for training and maintenance. If successful, the pilot could save $15 million annually in borrowing costs, breaking even in about 2.5 years. Scaling to CTA’s full $3.4 billion debt could yield $100 million in annual savings, offsetting nearly 20% of the 2026 deficit. A city-wide rollout for the $38 billion debt could save hundreds of millions, easing pressure on taxpayers and transit riders.

Addressing Challenges

This isn’t without hurdles. Regulatory compliance for tokenized bonds requires careful navigation, which is why the plan includes early consultation with state and federal authorities. Stakeholder resistance—whether from CTA officials or bondholders—will be addressed through hands-on training and a successful pilot. Technical risks, like software bugs, will be mitigated with third-party audits from firms like Quantstamp. Most importantly, the public dashboard ensures Chicagoans can see their city’s progress, building trust in a system that’s been opaque for too long.

Why Now?

Chicago’s debt, especially the CTA’s, demands bold action. With the CTA facing a fiscal cliff and Chicago’s broader financial challenges looming, blockchain offers a path to stability without raising fares or cutting services. This proposal, built on years of research and collaboration with leaders like former Governor Rauner, is ready to move from vision to reality.

Call to Action

To Chicago’s leaders—Mayor, City Council, CTA Board, and RTA—let’s launch this $500 million pilot to prove blockchain’s potential. To Chicagoans, visit the forthcoming transparency portal to see your city’s finances in real time. Together, we can tackle Chicago’s $38 billion debt, starting with the CTA, and build a stronger, more transparent future.

For more details or to get involved, contact the Chicago CFO’s office.