According to a report by the nonprofit Truth in Accounting (TIA) watchdog group, 41 states are facing mountains of debt, and Illinois is one of the worst offenders.
During a Nov. 15 guest segment "Chicago's Morning Answer" on WIND, TIA founder and CEO Sheila Weinberg discussed the report and some of the implications the debt crisis carries for Chicagoans.
Dan Proft, one of the hosts of "Chicago's Morning Answer," is a principal in Local Government Information Services, which owns this publication. He is also on the board of TIA.
Proft said according to its most recent financial statement released a year ago, Chicago is facing an all-but-insurmountable $37.4 billion in debt against an operating budget of $3.7 billion.
“To fix that, the governor has raised taxes but he would have to raise $41,700 per taxpayer to catch up to all these bills they’ve accumulated and did not include in their balanced budget calculations,” Weinberg said during the segment.
Pointing out that TIA’s report showed the primary cause of Chicago’s debt load is unfunded pension liabilities –$36 billion of the total debt – Proft questioned whether the situation is as dire as it seems.
“We’ve been hearing the doom and gloom for a long time and nobody believes if it’s real,” he said. “People believe we can continue to play this shell game and muddle forward. Are they wrong? Should they actually be concerned or is this stuff for the number crunchers?”
Weinberg said the issue is relevant because cracks are already forming in the state’s ability to cover health care costs for state workers and retirees as interest on the debt mounts.
“If they want to go to the doctor, they have to pay up front because doctors aren’t going to wait for their bills,” she said. “And the state is incurring tons of interest costs, and the city’s doing the same. They’re just in a sinkhole that we don’t see them coming out of in the near future.”
“Do you see an effort to come out of it with those tax increases just going to feed the beast, but sans any structural reforms that would change things for the city?” Proft asked.
“Well we always say if you want to fix these problems you have to take more money in or take less money out,” Weinberg said. “So, on the surface, a tax increase would bring more money in, but I don’t think they did very much (to) take less money out of the system.”
“Well, why can’t state lawmakers control their spending?” "Chicago's Morning Answer" co-host Amy Jacobson asked. “Does it come to a point where you wake up, (realize) you know, ‘I kind of have a problem here?’”
Weinberg mentioned the difficulty citizens have in holding their elected officials accountable because of confusion over terminology: a balanced budget and debt reduction are two different things.
“I think it’s a political thing where the citizens, as you say, aren’t paying enough attention,” Weinberg said. “The mayor every year is coming out saying, ‘Hey I balanced the budget.’ But in 2016 … they ran a $3.6 billion deficit. So let’s be truthful with the citizens so they can hold you accountable.”
Noting the state’s massive debt for pensions and retiree health care, as well as multibillion-dollar deficits under the guise of balanced budgets, Proft asked Weinberg, “Is there any way back? Can these unfunded obligations ever truly be paid down?”
“I cannot tell you,” she answered. “It looks impossible and it probably is without some type of reform. The state supreme court put everyone in a huge box where you theoretically can’t reform. The only way you can do it is raise taxes (to) bring more income in or cut the size of government. I would say you have to do both.”
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