CHICAGO, Jan 11 (Reuters) - A Chicago City Council committee on Monday approved $2.65 billion of bonds requested by Mayor Rahm Emanuel to further trim risky adjustable-rate debt from its portfolio and raise money for capital improvements.

The cash-strapped city is trying to wean itself off of bond restructurings to free up money for the budget and discontinue variable-rate debt and related interest rate swaps. The interest rate hedges turned soured after Moody's Investors Service cut Chicago's credit rating to junk last year.

The finance committee advanced the bonds to the full council for a final vote on Wednesday. Emanuel originally requested $1.25 billion of general obligation bonds, but city finance officials reduced the amount to $650 million after some aldermen raised concerns about agreeing to fund unspecified capital projects over two years.

Chicago Chief Financial Officer Carole Brown said she would return to the committee with details on capital projects that would be funded with $600 million of GO bonds.

The $650 million of bonds approved by the committee would in part restructure outstanding GO bonds by pushing out maturities and freeing up money earmarked for near-term debt service for the current and next city budget. Emanuel has vowed to end this practice, known as scoop and toss, by 2019.

The bonds, which would be priced through senior underwriter Goldman, Sachs & Co in the second half of 2016, would follow Chicago's $500 million GO bond restructuring and refunding slated to price on Tuesday.

A pre-marketing scale seen by Reuters showed yields topping out at 4.95 percent for bonds due in 2038 with a 5 percent coupon. That is 237 basis points over Municipal Market Data's benchmark triple-A yield scale at Monday's market close.

Brown said an overall rate of 5 percent is expected for Tuesday's bond sale through Citigroup and that savings on refunded bonds would exceed 3 percent.

The finance committee approved up to $400 million of second lien water revenue bonds to convert variable-rate debt to fixed rate and pay a roughly $100 million fee to RBC to terminate related swaps. An additional $400 million of second lien sewer revenue bonds and $200 million of sales tax revenue bonds were sent to the full council.

The committee also advanced up to $1 billion of bonds for Midway Airport to fund capital improvements and refund outstanding bonds.

(Reporting by Karen Pierog; Editing by Richard Chang)