(Bloomberg) — Chicago is planning to sell about $806 million in municipal bonds this week as part of a refinancing as Mayor Brandon Johnson races to close a budget gap of nearly $1 billion by year end.

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The city is expected to borrow $679.7 million of sales-tax-backed debt and $126.6 million of bonds tied to its general obligation pledge on Dec. 5. Proceeds will be used to refinance outstanding debt to save money and help close back-to-back shortfalls.

The sales come while Johnson and city council members disagree on how to fill a $982.4 million hole in next year’s budget. The mayor proposed a $300 million property-tax increase that aldermen unanimously rejected. Tensions have escalated so much that potential investors in the upcoming general obligation bond sale were warned there is “no assurance” that a spending plan will be passed on time, according to offering documents.

“The deals will probably need more yield than similarly rated bonds” to account for the “noise,” said Dan Solender, head of municipal securities at Lord Abbett & Co. Yields on long-dated Chicago bonds are about 127 basis points wider than top-rated benchmark securities, according to BVAL pricing data compiled by Bloomberg. That’s up from around 93 basis points in late August, the data shows.

The bond sale will offer a glimpse into how concerned investors are about Chicago’s budget impasse. Ratings companies have already warned of credit downgrades with both S&P Global Ratings and Kroll Bond Rating Agency placing the city on watch. The city’s general obligation bonds are rated BBB+ by S&P while the sales-tax debt carries a AA- grade from the company.

After the city council rebuffed the proposed property-tax hike, lawmakers are negotiating piecemeal items from higher levies on alcohol sales to cloud computing to garbage fees. Simply, expenses like labor and pension costs have increased while revenue came in lower than expected.

Johnson is seeking aldermen’s support for a $60 million to $70 million property tax hike, according to people familiar with the matter who asked not to be named amid the negotiations. That amount would be in line with a jump in the consumer price index, they said. A spokesperson for Johnson declined to comment.

To be sure, the muni market has stabilized since a late October bond rout and benchmark yields have dropped, making a refinancing more attractive. Plus, investors have favored debt from issuers offering higher yield. An index of BBB-rated state and local government bonds that includes Chicago debt has earned 4.9% this year, topping the 1.9% gain by benchmark AAA munis, according to data compiled by Bloomberg.