Truth in Accounting report paints grim picture of Chicago's finances, increasing taxpayers' burden
The debt load of every taxpayer in Chicago continues to swell as lawmakers across the city have shown no progress in trimming the massive deficits that have led a fiscal watchdog group to give the city a failing grade in its latest annual financial report.
“Chicago has always had a failing grade and things are not looking up,” Truth in Accounting (TIA) founder and CEO Sheila Weinberg told Chicago City Wire. “This centers around the state law that requires the city to balance its budget and they way [Chicago] has used gimmicks to get around the law. Pension benefits, retiree benefits don’t get included in budgets. The can is just kicked down the road as they do minimum funding for all those programs.”
According to TIA, the end result is that every taxpayer in Chicago is now theoretically responsible for more than $38,000 if the city is to cover its $34 billion tab in largely unfunded pension liability. Even without including the debt from the Chicago Public Schools and the Chicago Transit Authority in the analysis, the $38,000 strapped to the back of every taxpayer in Chicago is $2,100 higher than last year's TIA report.
Weinberg said this year's assessments were made after TIA analysts studied the city’s audited Comprehensive Annual Financial Report (CAFR) and retirement plans’ reports for the 2018 fiscal year.
“The scheme only has them paying a little bit of the required payment and ramping up later,” Weinberg said. “It’s like if you had a credit card and the minimum payment was $1,000 per month and you only paid $500, then went on to balance your budget. Pension plan actuaries tell them how much they should contribute, but they go ahead and use this scheme they’ve set up for themselves and now we have $30 billion in unfunded pension liability.”
Weinberg said the only way city officials can begin to remedy the situation is by first admitting what seems obvious to many.
“Stop pretending the budget is balanced and telling people it’s balanced,” she said. “We have something that’s called fact-based budgeting, and they need more of that. Overall thing is that you have to either bring more money into the plan or take less out.”