Chicago's Death Spiral of Debt

What happens when you live on credit cards? Eventually the bill comes due. How Debt Ate Chicago | City Journal

Chicago has been piling on the debt for decades. Pension debt. Bonds not used for infrastructure but to pay bills. The creation of a myriad of "taxing bodies" that also have debt.

The linked article starts with a story about a lack of cops to respond to a fight, which eventually resulted in 3 deaths. No cop was dispatched until after the escalation of the fight, and the deaths. Why? Because there were no cops available. They describe the shortage as "dire."

Chicago has dominated America’s heartland since the late nineteenth century. As the City of the Big Shoulders, it has been a place whose self-reliance and drive allowed it to compete with coastal metros boasting more obvious advantages. Chicago’s landscape and weather may leave something to be desired, but the city’s combination of cosmopolitanism and localism, embodied in its diverse neighborhoods, has helped give it a distinctive American personality. Yet bad services, corrupt politics, and elevated crime have made life in Chicago increasingly unpleasant, all worsened by the city’s parlous finances.

An ever-mounting debt burden is the greatest threat to the city’s survival. As that problem worsens, more residents will question whether they want to stay in a windswept city paying down someone else’s pension—or decamp for places that don’t place such a millstone around their citizens’ necks.

There have already been high-profile moves out of the city and out of the state. Ken Griffin and his Citadel hedge fund moving from Chicago to Miami is only the most obvious. Boeing is another. (It was briefly headquartered in Chicago.) Hell, I worked for a company in the '80s that moved out the city for crime/tax issues. Things haven't gotten better since then. (The savings on employment taxes - what was called the head tax - and sales tax alone could justify a move to the suburbs.)

Chicago’s taxation is also brutal on businesses. A recent study of 53 cities found that Chicago’s tax on industrial properties was nearly double the average of other cities. Chicago’s commercial property-tax rate, at more than 4 percent per year, was by far the worst of any major city and more than twice the average.

A lot of people are moving out of the city as well.

Making matters worse, Chicago’s population is shrinking. Chicago hit its peak population 70 years ago, and it has contracted further since the early 1990s, when many other big cities began to revive. At about 2.7 million people, it’s still, barely, America’s third-largest city, but it’s a quarter smaller than it was about a half-century ago.

Aside from the high taxes, which aren't about to be cut anytime soon, there is crime. Chicago is not an attractive place to live, or even visit.

There is more. Click thru.

The hat tip goes to Meep: Public Finance Round-Up 2024 June 5: NY, Chicago, and Audit Delays! - Chicago is reaching the death spiral

What’s silly is that it doesn’t require a miracle for Chicago to escape its debt burden.

It simply requires municipal bankruptcy, which, in Illinois, requires the Illinois state legislature to allow Chicago to declare bankruptcy.

Now, one may say that it requires the equivalent of a political miracle to allow that to happen, and that may be true.