Truth in Accounting awards Chicago 'F' grade
The nonpartisan Truth in Accounting think-tank awarded the city of Chicago a transparency "F" grade for failing to disclose that each resident now owes $38,100.
TIA for almost two decades has rapidly produced detailed forensic accounting analysis of municipal, state, and federal government fiscal health. Although Illinois state law requires the city of Chicago to publish its audited financial statement within six months of the end of the fiscal year for public review, TIA reported that Chicago for the fourth year in a row failed to comply in a timely way with its June 30 mandated deadline.
But on July 5, 2019, the 2018 fiscal year Comprehensive Annual Financial Report (CAFR) appeared on the city's website with a letter of transmittal backdated to June 28, 2019. TIA found the CAFR data revealed the Chicago at the end of 2018 owed a net $34.4 billion, the majority is attributed to a $31.1-billion unfunded public pension plan and about $685 million in unfunded retiree health care.
The city's shortfall between the end of 2017 and 2018 increased by $2,100, or 6.8 percent. With the annual rate of inflation at 2.4 percent last year, Chicago residents' debt to pay for the benefits of retired public employees jumped almost three times faster.
TIA cautions that the total Chicago taxpayer's debt burden would be much higher, but Chicago Public Schools and the Chicago Transit Authority are separate from the city.
The City of Chicago continued to lead the nation in one 2018 category, with a net 156 more residents leaving the city each day than moving to the city, up from about 100 in 2014. New York was second with a loss of 132 a day, followed by Los Angeles with 128.
With Chicago and the suburban fringe of liberal Cook County comprising 5.2 million residents, or 41 percent of Illinois's 12.7 million population, Illinois has the highest combined state and local tax burdens of all 50 states and Washington, D.C., according to a report by the WalletHub personal finance service site. The "Land of Lincoln" effective state and local tax rate in a household earning the median U.S. income is 14.9 percent, or about $8,653, 38.5 percent higher than the national average.
TIA founder and CEO Sheila Weinberg summarized TIA's verdict on transparency:
We found that Chicago's leaders have failed to address the structural problems weakening its financial system, instead plugging the holes with short-term fixes. When the bills come due, Chicago politicians are going to face a lose-lose dilemma: reduce services and benefits or fix the problem on the backs of future taxpayers.
Bottom line: Chicago would need $38,100 from each of its taxpayers to pay all of its bills, so it has received an "F" for its finances from Truth in Accounting. According to Truth in Accounting's grading scale, any government with a Taxpayer Burden greater than $20,000 receives an "F."
Chicago politicians did not disclose the CAFR's dreary numbers until after the Illinois state politicians passed a budget on June 6 to borrow another $20.6 billion and slap on another 21 new taxes that will cost every man, woman, and child another $370 a year to supposedly repair "bridges and roads and highways" that are "falling apart."
But the Illinois Policy Center estimates that the $40.6-billion operating budget is out of balance by as much as $1.3 billion, with at least $1.4 billion of "pork projects" that fund dog parks, snowmobile paths, pickleball courts, school playgrounds, swimming pools, and arts grants to rehabilitate a vacant theater.