2011 audit shows Chicago has more cash and growing debt load
BY FRAN SPIELMAN City Hall Reporter fspielman@suntimes.com July 22, 2012 7:34PM
Mayor Rahm Emanuel speaks to the media, Wednesday, November 16, 2011, after council members voted 50-0 to approve the Administration’s 2012 budget proposal.| Jean Lachat~Sun-Times
Updated: August 24, 2012 6:07AM
Mayor Rahm Emanuel closed the books on 2011 with $310 million in cash on hand, $167 million more than the year before, but added $465 million to the mountain of debt piled on Chicago taxpayers, year-end audits show.
The healthy unreserved balance was generated by Emanuel’s aggressive cost-cutting efforts. It’s a marked turn-around from the precarious financial condition the city was in during the close of former Mayor Richard M. Daley’s 22-year reign.
Daley postponed Chicago’s day of reckoning by balancing his final budget with $330 million in Skyway and parking meters reserves and other short-term fixes. That left just $76 million remaining from the 75-year, $1.15 billion deal that privatized Chicago parking meters.
Chicago ended 2009 with a paltry unallocated balance of just $2.7 million. Experts recommend a cash cushion of at least $200 million for a budget the size of Chicago’s, according to the Civic Federation.
The new round of borrowing brings Chicago’s total long-term debt to just over $27 billion. That’s $10,000 for every one of the city’s nearly 2.7 million residents. More than a decade ago, the debt load was $9.6 billion or $3,338-per-resident.
“Is it troubling? The answer is, ‘no.’ We still have a very strong bond rating. Our fiscal position is getting better every year and we are aggressively managing our liabilities and obligations,” City Comptroller Amer Ahmad said Friday, the same day that Moody’s Investor’s Service downgraded $6.8 billion in O’Hare Airport bonds.
The audits by the accounting firm of Deloitte & Touche provide a treasuretrove of information about city finances and operations.
Interesting nuggets include:
♦ In spite of a spike in homicides and shootings and a troubling return to downtown mob attacks, the number of “physical arrests” by Chicago Police officers declined again — from 167,355 in 2010 to 152,740. That continues a six-year trend that coincides with the hiring slowdown that caused a dramatic decline in the number of police officers. Police made 227,576 arrests in 2006. The number of arrests has been dropping ever since.
The Chicago Police Department has long argued that it doesn’t measure the success of crime-fighting strategies simply by the number of arrests.
♦ O’Hare Airport continues to pay the price for the prolonged recession. The number of passenger “enplanements” dropped by a modest 25,545 — to 33.2 million. But the number of international boardings declined dramatically — from 5.1 million in 2010 to 4.4 million last year. O’Hare managed to hold its own, thanks to a 658,000 increase in domestic enplanements. Total passengers declined by three-tenths of 1 percent.
♦ The story was the opposite at budget-oriented Midway, spelling potentially good news if Emanuel chooses to revive the $2.5 billion deal to privatize Midway that collapsed for lack of financing.
Midway boardings rose 6.8 percent — from 8.8 million in 2010 to 9.45 million last year. That’s a dramatic reversal from the 11.2 percent drop suffered in 2008.
♦ Daily refuse collections rose slightly — to 3,983, a 52-ton increase over 2010 — reversing a five-year trend. The amount of garbage generated by the 600,000 Chicago households that rely on city collections had been declining steadily, from 4,451 tons a day in 2006 to 4,240 in 2008, 3,974 in 2009 and 3,931 last year.
♦ Average daily water consumption continued its steady decline — to 770.9 million gallons. In 2006, Chicago’s 1.04 million households were guzzling 884.9 million gallons a day. Operating revenues in the city’s water fund dropped by $4.2 million because of a “decline in pumping,” the audit states.
♦ Chicago’s 159 tax-increment-financing districts had a collective balance of $1.4 billion. Most of that money is uncommitted.
Although Emanuel has been relentless in pursuing deadbeats — even to the point of siphoning their state income tax returns — Ahmad acknowledged Friday that hundreds of millions of dollars in overdue parking tickets and other outstanding debts remains uncollected.
“We need to think about whether we’ll ever collect it or need to write it off,” he said.
By July 31, Emanuel must release a preliminary city budget. It’s almost certain to include another massive deficit — strengthening the city’s case in contract talks with city unions — that will have to be closed with more layoffs, service cuts and new revenues.
