Chicago is doomed to become a ‘municipal black hole’

The Windy City is famous for a lot of things, including the biting winter breeze off Lake Michigan and blowhard politicians.

Whether Chicago got its pet name from one or the other doesn’t really matter, since both fit.

But soon, the place also called the Second City will be known as something else: The municipal black hole.

It’s only a matter of when, not if, Chicago will consume itself financially, and will start sucking in the wealth of anyone and anything connected to it, just as black holes in space eat the energy of nearby stars.

The Illinois state government recently passed its first budget in three years.

Buried on page 711 of this monstrosity was a gift to the city of Chicago. The state granted authorities that operate under home rule, like Chicago, to segregate state funds. The Windy City receives about $1 billion of tax dollars from the state, generated by taxes and fees.

Under this ruling, Chicago can put those funds in a separate account and issue bonds backed by that identified stream of income. The move allows the city to claim that the bonds have a better backing than simple general obligation bonds, which are backed by the full faith and credit of the town.

This gives bonds backed by the segregated funds a higher rating and lower interest cost. It saves the city much-needed cash.

But there’s a problem.

It’s easy to lay the blame on runaway pension liabilities, not uncommon in cities and states across this country. But Chicago’s trouble is deeper than most, and recent decisions by the state of Illinois will only make things worse.

P/C PIXABAY