Each Chicago taxpayer on hook for nearly $42,000 of city debt
Fiscal watchdog Truth in Accounting found Chicagoans are each responsible for the second-most debt in the nation. It again gave the city an ‘F’ grade despite improvements from one-time federal COVID-19 aid and unusually high pension investment returns.
Chicago’s debt per taxpayer remains the nation’s second highest at $41,900, the latest Financial State of the Cities report from fiscal watchdog Truth in Accounting shows.
That means each of the city’s taxpayers would have to send a check for that amount to City Hall just to pay the bills Chicago has accumulated over the years. The Windy City was surpassed only by New York City, which had a per taxpayer debt burden of $56,900. The analysis was released Feb. 6 of the 75 most-populous cities’ 2021 annual comprehensive financial reports.
According to the report, Chicago had just $10.6 billion in assets available to pay bills totaling nearly $48.8 billion. Chicago’s total bills were the second highest in the nation, better than only New York City that had over $251 billion in total bills. Chicago’s total bills were 2.5 times higher than third-highest Philadelphia’s $19.5 billion, highlighting how much the city is struggling with debt and spending.
The report also reveals Chicago has the largest amount of unfunded pension benefits in the nation at over $33.7 billion. That’s over three times as much as second-highest New York City’s $10.7 billion.
Chicago’s debt per taxpayer remains virtually unchanged from last year’s report, improving by just $1,200, despite proclamations from Mayor Lori Lightfoot and her top aides the city’s financial condition has drastically improved under her leadership. Lightfoot declared her 2023 spending plan represents a “stability budget” for the city, touting funded pensions and reduced debt. Chicago’s Chief Financial Officer Jennie Huang Bennett recently declared Chicago “is on a stable financial footing” and cited “fiscal discipline” as the reason for the supposed turnaround in the city’s financial condition.
The Truth in Accounting report states the marginal improvement in Chicago’s perilous financial condition was the result of unrealized gains in pension investments and federal stimulus funds boosting city coffers.
A closer look at the numbers tells a different story. The growth in Chicago’s pension and debt service costs now eat up nearly 43% of the city’s budget after massive increases in recent years. In order to keep up with these payments, the city’s property tax levy has more than doubled.
Chicagoans struggle to keep up with property tax increases, which rise by hundreds of dollars each year for average homeowners, according to the most recent reports from the Cook County Clerk. Still, Lightfoot has equated potential increases to paying for extra sandwich toppings.
Despite the rhetoric, Lightfoot’s own budget forecast projects the $127.9 million 2023 deficit to increase nearly 2.5 times to $306.1 million next year assuming a positive financial outlook. Assuming a negative economic outlook, the projected deficit for 2024 would be nearly $1 billion.
It gets worse for Chicagoans. A similar report from Truth in Accounting from May 2022 combined the city’s local debt burden with the state’s debt burden and found Chicago to have the highest combined debt burden in the nation. When adding the debt Chicagoans owe to the state on top of the debt they owe to the city and other underlying government entities, each resident’s share comes out to $135,700. No other city had a per-taxpayer debt burden over $91,500, showing just how serious the debt problem is for the city and its taxpayers.