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Empty pockets: City has $2.7 million
7/29/2010 11:20:27 AM
BY FRAN SPIELMAN City Hall Reporter for the Chicago Sun Times
Mayor Daley closed the books on 2009 with just $2.7 million in the bank, having added $461 million to the mountain of debt piled on Chicago taxpayers, year-end audits show.
As low as the unreserved cash balance is, it’s more than ten-times higher than the $200,000 the city had left after 2008.
The figure does not include dwindling long-term reserves generated by the parking meter and Chicago Skyway leases that Daley could tap once again to erase a projected $700 million shortfall.
Performed by the accounting firm of Deloitte & Touche, the audits provide a treasure-trove of information about city finances and operations.
They reveal everything from a steady decline in police arrests, O’Hare Airport passengers and refuse collections to an increase in passenger boardings at economy-minded Midway Airport.
The cash cushion is somewhat scary for a city with an annual budget of $6.1 billion. It’s tantamount to the average homeowner letting his or her checking account dwindle down to pennies.
Ten years ago, the city had an $80.6 million cash cushion. Experts recommend at least $200 million in reserve for a budget the size of Chicago’s, according to Civic Federation President Laurence Msall.
“The city is in a very precarious financial position. … It’s going to call for a major restructuring of city services. Everything will have to be on the table,” Msall said.
Daley agreed when asked Wednesday about the preliminary budget he will release on Friday.
“It’s a very, very difficult economy. Walk down anybody’s block and talk to people. Yesterday, four people came up to me and said, ‘Mayor, where am I gonna get a job?’… People can only survive so long. They’re out of work, or they’re getting cut back,” the mayor said.
The new borrowing brings Chicago’s total long-term debt to $16.9 billion. That’s $5,864 for every one of the city’s 2.9 million residents.
Just a decade ago, the debt load was $9.6 billion or $3,338-per-person.
Chief Financial Officer Gene Saffold said the debt is “something we monitor constantly and is watched also by rating agencies evaluating our bond rating. While there have been some concerns expressed in that regard, we continue to manage it prudently.”
Released in response to a Freedom of Information request, the audits show that O’Hare was hard hit by the prolonged recession. There was a 7.8 percent drop in the number of passenger boardings — from 34.7 million in 2008 to 32.04 million in 2009. Total passengers declined by 8.8 percent — from 70.8 million in 2008 to 64.5 million last year.
O’Hare concession revenues dropped — from $215.1 million in 2008 to $185.1 million last year. Parking revenues also declined sharply — from $108.5 million in 2008 to $89.1 million last year.
The story was the opposite at budget-oriented Midway, spelling potentially good news for Daley’s plan to revive the $2.5 billion deal to privatize Midway Airport. The deal collapsed for lack of financing.
Midway boardings rose by 2.6 percent — from 8.36 million in 2008 to 8.57 million in 2009. That’s a dramatic reversal from the 11.2 percent drop the year before.
Southwest Airlines continues to dominate the skies at Midway, with 83.9 percent of all enplanements at the Southwest Side airport.
While Midway usage was up, concession revenues were down — from $54.3 million in 2008 to $49.3 million last year. Car rentals rose slightly, but parking revenues dropped by 11.4 percent — from $31.5 million to $27.9 million. Restaurant revenues fell from $8.1 million to $7.4 million.
The audits also include some troubling numbers that have nothing to do with city finances.
The number of “physical arrests” by Chicago Police continued their steady decline — from 227,576 in 2006 and 196,621 in 2008 to 181,254 last year.
The downward trend coincides with a hiring slowdown that has left the Police Department more than 2,000 officers-a-day below authorized strength. It also coincides with allegations of “de-policing,” a condition that exists when police officers “stop doing their jobs” because they're afraid nobody has their back.
Police Department spokesman Roderick Drew said the department “doesn’t measure the success of crime-fighting strategies simply by the number of arrests.” He argued that the “true measure” is the reduction in reported crime that Chicago has experienced over the past decade.
“In fact we have experienced 18 consecutive months of lower overall crime in Chicago dating back to January 2009,” he said.
The audits also show that daily refuse collections have also dropped — from 4,451 tons in 2006 to 3,974 and 4,240 in 2008 to 3,974 in 2009.
The audits show that Chicago’s 159 tax-increment financing districts had a collective balance of $1.2 billion on Dec. 31. Only $37.1 million of that amount is reserved. The rest remains uncommitted.
Within the boundaries of a TIF, property taxes are frozen at their current levels for 23 years. When the value of property increases, the added tax revenue is set aside for infrastructure improvements needed to lure businesses to the area and subsidies for those that agree to come.
Over the years, TIFs have become Daley's favorite — and he says only — economic development tool, diverting tens of millions of dollars from the city, Chicago Public Schools and other local taxing districts.
The Sun-Times reported last week that Chicago is facing a record budget shortfall — approaching $700 million when the cost of police and fire contracts are factored in--setting the stage for another raid on the parking meter and Skyway reserves.
As of Dec. 31, the city had just $180 million left from the $1.15 billion parking meter windfall that was supposed to last for 75 years. There was $550 million remaining from the $1.83 billion deal that privatized the Skyway for 99 years.
The city’s preliminary 2011 budget is scheduled to be released later this week.
