Report: Chicago a winded city financially
Chicago ranks near the bottom in fiscal strength from among 116 cities with populations of at least 200,000, an analysis by the nonprofit group Truth In Accounting (TIA) has found.
In a "State Data Lab" using 2015 financial records released by city staffers, researchers from the Chicago-based think tank that analyzes government finances also said the city has the second-highest taxpayer burden among the 20 most-populous U.S. cities, with each taxpayer carrying a $44,000 obligation.
Chicago is committed to nearly $34 billion in pension payments and another $803 million for retiree health care benefits, neither of which has been adequately funded or accounted for, the report said.
Such dubious distinction has earned the city the growing reputation of being a poster child for financial mismanagement, resulting in a number of recent financial downgrades. TIA researchers said such financial distress is directly associated with other hardships, like lower quality of life, poor highway systems and slow home recovery prices.
“The situation with Chicago is actually quite a bit worse because this data only measures city liabilities residents are burdened with,” Mark Glennon, founder of the Wirepoints newsletter, which analyzes local government and the economy, told the Chicago City Wire. “If you were to factor all those things in, the per-person liability of every taxpayer would probably double.”
In addition, a recently released Fiscal Times study found that other issues adversely affecting the country’s third-largest city include variables such as thin reserves, large volumes of outstanding debt and critically underfunded pension plans.
More recently, the city’s Municipal Employees' Annuity and Benefit Fund (MEABF) reported $4.7 billion in assets and a staggering $14.7 billion in accrued liabilities.
Chicago Mayor Rahm Emanuel recently unveiled a plan to address the underfunding, raising water and sewer taxes and requiring certain employees to make larger contributions to the system.
According to the Fiscal Times study, Chicago is joined at the bottom of the list of financial struggles by New York City, which despite benefiting from an extended bull market and soaring real estate prices finds itself saddled with more per capita debt than even the Windy City.
“It’s interesting that New York ranks as poor as Chicago, because some local people feel a city tax like New York would be a solution to the problems here,” Glennon said. “But despite the added taxes, the city has not found a way to solve the related problems they face.”
Other major cities receiving overall scores of less than 40 on a scale of 100 are Reno, St. Louis and Toledo. All three have relatively small general fund balances and high debt burdens.
“That so many big cities are struggling should not come as a surprise,” Glennon said. “Chicago may be among the worse, but many others are not far behind. It just seems many of the smaller and mid-size cities have somehow managed to get a better grip on things.”