Truth in Accounting research director warns Chicago is on path to bankruptcy
Bill Bergman, director of research for Truth in Accounting, warns that Chicago’s revenues continue to fall short of the city’s expenses and the annual analysis does not accurately portray the issues.
"Chicago persists in papering over bad results with less-than-reliable accounting and financial reporting, and offering new kick-the-can-down-the-road financing ideas,” Bergman told the Chicago City Wire. “Someday, the train is going to stop. We may all be better off if it stops sooner than later."
In episode 21 of his YouTube series “Beer with Bill," Bergman said although the annual financial analysis for Chicago’s budget is based on projections, it shows a diminishing financial gap that is actually much worse than reported.
“The actual results have been woefully worse than the projected amounts in recent years,” Bergman said. “The real deficits … have massively exceeded revenues.”
Bergman is concerned with the burden that is being placed on taxpayers because of city expenditures.
"There are a lot of thriving organizations in Chicago right now, but the City of Chicago and the Chicago Public Schools are not among them,” he told the Chicago City Wire. “They still have money coming in the door, covering near-term-obligations, given they survive on tax dollars taken from citizens. But over time, the city, CPS, Cook County and the State of Illinois have covered expenses running ahead of revenue with long-term obligations.”
Bergman said Chicago taxpayers fare the worst among the 10 largest cities in the country.
“Considering the debt accumulated by the city as well as other debts from governments that matter for city taxpayers like school districts, the county the city is in and the state the city is in, by our reckoning, city taxpayers are looking at a credit card bill the city has run up on their behalf that is over $100,000 per taxpayer," he said.
One challenge Chicago faces is attracting new taxpayers, and keeping old ones around, given the prospects for higher taxes, Bergman said. Chicago is discussing selling bonds to more appropriately fund pension plans, which all depend on investment performance, he said.
“If the investment performance of the bonds does not do well, taxpayers will be the ones to suffer,” Bergman said in his video.
Bergman is concerned that things are so bad in Chicago that the city might be on the verge of bankruptcy if it continues on its current path, he said.