When the city does reveal its spending plans to the public, the information often turns out to be inaccurate or misleading. Spot-checks by the Tribune found many projects came in grossly over budget and years late, which often led to more borrowing.
The dependence on bond money has created a massive debt burden even as the city wrestles with chronic deficits and a pension crisis. Chicago’s outstanding debt on general obligation bonds has quadrupled during the past 18 years, reaching $7.2 billion last year. With interest, that amount nearly doubles.
Sixty-three percent of all property taxes went to debt payments last year, the highest percentage since at least 1996.
Municipalities across the country are struggling, but Chicago has more general obligation debt per capita than any of the 10 largest U.S. cities except New York, according to an analysis of those cities’ financial statements. It even has more than Detroit, which recently filed for bankruptcy.
When told of the Tribune’s findings, Joseph Harris, a former auditor general for Detroit, said Chicago’s robust tax base and wide range of industries should insulate it from a Motor City-style meltdown. But borrowing for short-term expenses is particularly dangerous, he said, because it obscures the city’s financial problems while also making them worse.
“It’s like a cancer,” he said. “You may not know that you have this affliction until all of a sudden you’ve got a tumor the size of a grapefruit in your intestine.”
The billions in bonds issued under Daley allowed him to cut ribbons, plant trees and hand out large contracts — helping him become the longest-serving mayor in Chicago history.
The Tribune provided the former mayor details on its analysis. But Daley declined repeated requests for interviews and instead issued a statement.
“As mayor, I believed my job was to address the immediate needs of the city and its residents while anticipating the needs of the future. … As a result, Chicago now has world-class stature, the foundation on which new opportunities and success are built,” he wrote.