|
Reason Foundation Research Director Geoff Lawrence said Illinois
is way upside down, with a debt ratio of 276%.
“It has way more debt than assets, $80 billion in total assets
versus $220 billion in debt, so if you were to try to liquidate
all of the state's assets to pay off all its debts, it would be
impossible,” Lawrence told The Center Square.
The report also flagged Illinois for liabilities per capita and
unrestricted net position.
Lawrence said Chicago residents are facing heavy city and county
debt on top of federal and state debt.
“In addition to what you owe to the federal government in terms
of outstanding debt per citizen, you owe substantial amounts as
well to every level of local government,” Lawrence said, adding
that the city continues to dig the hole.
“They outspent revenues by about $580 million in the last year
for which we have data,” Lawrence said.
Chicago received seven out of a possible eight red flags,
narrowly missing the eighth.
Lawrence said Chicago owes $77 billion against $49.8 billion in
assets, not including Chicago Public Schools debt of more than
$93,000 per student.
“That means for a prolonged period, the city is going to have to
start spending significantly less money than it's bringing in,
and we haven't seen any evidence that the city is willing to do
that yet,” Lawrence said.
The report authors said analysis of Detroit’s financial
condition at the end of fiscal year 2012 would trigger seven red
flags, noting that city’s bankruptcy experience in 2013 bodes
poorly for Chicago.
“If the city doesn't turn this around, they're eventually going
to be looking at insolvency, potentially defaulting on debt,
maybe going into a municipal bankruptcy proceeding to try to
restructure their debts,” Lawrence said.
The report gave Cook County three red flags, in part due to a
debt ratio of 269% and per capita debt of $3,999 for each
taxpayer.
“When considering the effect of overlapping jurisdictions, the
most financially tenuous place in America is clearly Chicago,
where the city exhibits seven red flags while the school
district exhibits five, Cook County exhibits three, and the
state of Illinois also exhibits three,” the report concluded.
|
|
