The Free Press, Mankato, MN

State, national news

November 6, 2013

Spending in Chicago marked by desperation, political expediency, little oversight

(Continued)

Reporters put thousands of records into a database and used it to identify short-term expenditures like equipment purchases, legal costs and payments on bank loans used to cover pension costs and other expenses.

In one equipment purchase, city officials in 2003 used proceeds from recently issued bonds to buy $700,000 worth of Palm Pilot software, which powered hand-held organizers that were precursors to smartphones.

The software was obsolete within a few years. But the city wasn’t due to make its first principal payment until 2011. By that time, taxpayers had already paid $250,000 in interest on the purchase, raising the ultimate price to nearly $1 million — not including fees paid to issue the bonds.

Such added costs are the reason most experts say long-term borrowing should be reserved for projects that are intended to last. Depending on how bonds are structured, interest payments can double the cost of items paid for with bond proceeds; paying the brokers, banks and attorneys who execute the deals adds millions more.

But that didn’t stop the city from spending $1.1 billion in bond proceeds on software, books, trash cans and other equipment since 2000.

The city in 2005 bought $21 million worth of spare parts for its fleet of cars, dump trucks, street sweepers and other vehicles. Accounting documents filed at the time said the parts would last three years, but paying off the bonds used to cover them will take at least 12 years and increase the total cost to $30 million.

The cost of library books and other materials bought with bond money in 2011 by the Emanuel administration will have nearly doubled by the time the first principal payment is due in 2032, a decade after city accounting documents say the books will reach the end of their usable life.

“From a policy standpoint it doesn’t make any sense because you want to match the useful life of (what you pay for); otherwise you are having future generations pay off something that they didn’t even get to use,” said former Highland Park Mayor Michael Belsky, who teaches at the University of Chicago’s Harris School of Public Policy and managed the public finance group at the Fitch Ratings agency.

Text Only | Photo Reprints
State, national news
  • American doctor in Africa gets treatment for Ebola BOONE, N.C. (AP) — An American doctor infected with the deadly Ebola disease received intensive treatment Sunday in West Africa and was in stable condition, talking to his medical team and working on his computer, a spokeswoman for an aid group said.

    July 27, 2014

  • Salmonella Outbreak Trial [Duplicate] Trial in salmonella outbreak to start in Georgia ATLANTA (AP) — Three people accused of scheming to manufacture and ship salmonella-tainted peanuts that killed nine people, sickened more than 700 and prompted one of the largest food recalls in history are set to go to trial this week in south Georg

    July 27, 2014 1 Photo

  • Pitfalls emerge in health insurance renewals WASHINGTON — For the 8 million people who persevered through all the technical travails in the new health insurance exchanges and managed to sign up for coverage in 2014, their policies will probably automatically renew come November when open enroll

    July 27, 2014

  • Hamas agrees to 24-hour holiday truce in Gaza war GAZA CITY, Gaza Strip (AP) — Hamas on Sunday agreed to observe a 24-hour truce in Gaza after initially rejecting a similar Israeli offer, as fighting resumed and the two sides wrangled over the terms of a lull that international diplomats had hoped c

    July 27, 2014

  • Solar car race to end at University of Minnesota MINNEAPOLIS (AP) — A cross-country solar car race is set to finish at the University of Minnesota on Monday. About 10 solar cars from colleges around the world are competing in the eight-day, 1,700-mile American Solar Challenge. The race began July

    July 27, 2014

  • Dozens of oil trains pass through Minnesota weekly Railroad documents released by the state Department of Public Safety show about 50 trains carrying crude oil from North Dakota are passing through Minnesota each week.

    July 26, 2014

  • Medical Marijuana [Duplicate] Wanted: Manufacturers for Minn. medical pot program After the long slog to legalize medical marijuana, the state's real work has begun to get the unconventional medicine in severely ill patients' hands by this time next year.

    July 26, 2014 1 Photo

  • Minneapolis to NYC flight diverted to Milwaukee MILWAUKEE (AP) — A Delta Air Lines flight from Minneapolis to New York City has landed safely in Milwaukee after it was diverted. Delta spokeswoman Kate Modolo says the crew chose to divert the flight Saturday morning out of an abundance of caution a

    July 26, 2014

  • Hamas rejects 4-hour Gaza war truce extension BEIT HANOUN, Gaza Strip (AP) — A Hamas official says the group has rejected a four-hour extension of a humanitarian truce proposed by Israel. Sami Abu Zuhri sent a text message to reporters Saturday, saying: "No agreement to extending the calm for an

    July 26, 2014

  • Arizona execution renews debate over methods SAN FRANCISCO (AP) — A third execution by lethal injection has gone awry in six months, renewing debate over whether there is a foolproof way for the government to humanely kill condemned criminals, and whether it's even worth looking for one. Death

    July 26, 2014