Mayor Rahm Emanuel closed the books on 2012 with $33.4 million in unallocated cash on hand — down from $167 million the year before — while adding to the mountain of debt piled on Chicago taxpayers, year-end audits show.
Last week, Moody’s Investors ordered an unprecedented triple-drop in the city’s bond rating, citing Chicago’s “very large and growing” pension liabilities, “significant” debt service payments, “unrelenting public safety demands” and historic reluctance to raise local taxes that has continued under Emanuel.
The 2012 city audits explain why. They show that an unallocated balance that was $167 million a year ago because of Emanuel’s aggressive cost-cutting efforts has dropped to $33.4 million.
Budget Director Alex Holt blamed the $133.6 million drop on “honest” budgeting and ending the long-standing practice of carrying “ghost” vacancies.
“We’re trying to be more transparent about what we’re really spending and taking in — not just carrying a bunch of people who took up money in the budget and left money on the table at the end of the year,” Holt said.
“Let’s be straightforward about what we’ve got to spend and not pretend we’re gonna hire for a position we haven’t hired for, who know how many years when those resources are need to provide other services. ... This is about matching revenues with expenses. You don’t want to over-tax people.”
In last week’s report, Moody’s noted that the city’s total fund balance at the close of 2012 was $231.3 million and that Chicago has just $625 million in “leased asset reserves.” Had the city fully funded its $1.5 billion “actuarially required contribution” to its four under-funded city employee pension funds in 2012 alone, “these two reserves would have been entirely depleted,” Moody’s said.
The “unassigned” balance is $33.4 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 city ended 2009 with an unallocated checkbook balance of just $2.7 million.
The new round of borrowing brings Chicago’s total long-term debt to nearly $29 billion. That’s $10,780 for every one of the city’s nearly 2.69 million residents. More than a decade ago, the debt load was $9.6 billion or $3,338 per resident.
Last year, now-retiring City Comptroller Amer Ahmad argued that the city’s debt load was not “troubling” because, “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.”
He can no longer say that after the triple-drop in Chicago’s bond rating.
The audits by the accounting firm of Deloitte & Touche provide a treasure trove of information about city finances and operations.
Interesting nuggets include:
■ The number of “physical arrests” by Chicago Police officers declined again — from 152,740 in 2011 to 145,390 in 2012. 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 like a rock 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.
■ Emergency responses continued their steady rise — to 472,752. That’s up from 300,971 in 2006.
■ O’Hare Airport operating revenues were up by $23.2 million, a 3.3 percent increase, thanks to rising terminal rental and use charges. Operating expenses rose $19.1 million because of rising personnel and contracting costs. Airline ticket taxes known as “passenger facility charges” generated $154.5 million in 2012.
The number of passenger “enplanements” rose by a modest 37,000 — to 33.24 million. That’s despite a continued decline by O’Hare’s two largest carriers — from 8.7 million passenger boardings in 2011 to 7.4 million in 2012 at United Airlines and from 7.6 million to 7.2 million by American.
In 2003, United and American together accounted for 67.7 percent of O’Hare enplanements. Now, it’s just 44 percent.
■The 55 percent subsidy to retiree health care that Emanuel wants to phase out and retirees are suing to maintain cost the city $97.5 million in 2012.
■ The condition of Chicago’s four city employee pension funds is growing ever more precarious. The firefighters pension fund has assets to cover just 25 percent of liabilities, followed by: Police (31 percent); Municipal Employees (38 percent) and Laborers (56 percent).
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.
Emanuel’s 2013 budget held the line on taxes, fines and fees — beyond those set in motion the year before and annual increases in parking meter rates locked into the 75-year lease. The mayor also eliminated 275, mostly-vacant jobs while making strategic investments in tree-trimming, rodent control and children’s health and after-school programs.
But, aldermen warned that it was the calm before the storm: a painful solution to the city’s pension crisis that will require both new revenues and concessions from city employees.
Former Mayor Richard M. 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 widely-despised, 75-year, $1.15 billion deal that privatized Chicago parking meters.
Some of the statistics here seem superfluous. For example, it's not stated why the generation of household waste declined. Recycling? Reduced packaging? Increased efficiency? You guess.
Second, the figure of debt per person should be debt per tax payer. People on welfare or not paying taxes have no debt to pay off since they don't contribute to the tax pool. So that number in reality is far higher.
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