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 Not only are Chicagoans’ taxes
higher than ever, but local government debt has reached a record high as well.
Analysis of the city and its sister governments reveals each Chicago household
is on the hook for $82,000 in local government debt. And until politicians get
serious about structural reforms, that burden will only grow larger.
A heavy load to bear
Chicagoans are stuck with nearly $71 billion in official local government debt,
up from $65 billion in 2015 – just two years ago.
Chicago-area governments owe nearly $40 billion in official pension debt alone.
And when Chicagoans’ share of all other local long-term and retiree health debt
is added in, each Chicago household is on the hook for over $67,000 in official
local government debt.
And Chicagoans’ burdens are even larger when one uses more realistic accounting
standards.
Under those standards, every household in the city of Chicago is on the hook for
$82,000 in debt.
In comparison, the annual median household income in Chicago is just $50,702
according to the U.S. Census Bureau.
Chicago’s four city-run pension
funds – for police, firefighters, laborers and municipal workers – have over $25
billion in official unfunded liabilities. Those four pension funds alone are
responsible for more than a third of the total local government debt Chicagoans
face.
The city of Chicago itself also owes more than $12 billion in long-term debt.
And Chicago’s sister governments – Chicago Public Schools, the Chicago Park
District and the Chicago Transit Authority – have $11 billion in pension debt
and $12 billion in long-term debt, and owe another $2.3 billion for retiree
health insurance costs.
Chicagoans are also on the hook for a little more than 50 percent of Cook County
governments’ official pension, long-term and retiree health insurance debts,
which total nearly $8 billion. What’s
worse, Chicago-area government debts are even bigger than the official numbers
suggest. According to more realistic
accounting standards from the Governmental Accounting Standards Board, or GASB,
Chicagoans are actually on the hook for $55 billion in pension debt, $16 billion
more than local governments’ official numbers.
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In total, Chicagoans are facing an $86
billion burden, according to GASB standards, or $82,000 per
household. That’s not even including Chicago households’ liability
for their share of the state of Illinois’ massive pension and other
debts.
And that per-household number is in
reality even higher. There are many households in Chicago that
cannot afford to pay such debt – with members who are unemployed,
fixed-income seniors, lower-income, etc. So the brunt of Chicago’s
debt burden will fall on a select number of residents, particularly
the city’s struggling middle class.
Overburdened and overwhelmed
Chicago-area politicians have gone on a tax hike spree over the last
several years. They’ve hit Chicagoans with record property tax
increases, new garbage collection fees, sales tax hikes and
sweetened beverage taxes.
Chicago governments have all been trying to tax their way out of
their structural spending problems at the expense of residents’
wallets. It hasn’t worked. And it’s made life worse for
already-struggling city residents.
Chicagoans have been under heavy strain over the past decade.
They’ve faced increased violence, weak jobs growth and the
incompetence of Chicago-area governments. Residents continue to face
higher taxes and fees – the highest in Illinois – as the dysfunction
gets worse.
That’s forced residents of all stripes – from millionaires to
middle- and working-class residents – to abandon the city in recent
years. Not only did Chicago’s population shrink between 2000 and
2010, but the entire Chicago metro area has also shrunk for three
years in a row. In all, Chicago’s population is at levels not seen
since 1920.
But that decline matters little to politicians at both the state and
city levels. Lawmakers still find it easier to pass the bill to
taxpayers than to actually tackle the reforms necessary to fix the
fundamental problems with government in Illinois.
Until the pension crisis is fixed through comprehensive reform and
politicians stop borrowing to paper over short-term crises –
Chicagoans will only see their tax bills go up and their debt
burdens increase.
And the more Chicagoans are burdened, the more likely those who can
leave will do so to find better opportunities elsewhere.
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