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Reason Foundation’s report on state and local government
finances said Detroit’s financial condition at the end of fiscal
year 2012 would trigger seven red flags, just like Chicago
received in the organization’s report last month.
In July 2013, Detroit became the largest city in U.S. history to
file for bankruptcy.
Glennon said Chicago, unlike Detroit, has sold most of its
future sales tax revenue.
“This was a major mistake that the legislature in Springfield
made about five years ago when they passed legislation
authorizing this form of financing,” Glennon told The Center
Square.
Glennon said Chicago’s pension funds have an unfunded liability
of $36 billion.
“You can't cut your way out of that. You'd be throwing retirees
on to the street if if you cut their pensions by 25%, by 75%, to
solve it. There's going to have to be another source of money to
fund those pensions.” Glennon said.
In July, Mayor Brandon Johnson’s budget office projected a $130
million budget gap for the current fiscal year, but Johnson said
on August 25 the shortfall was $85.1 million.
The mayor’s office projected a deficit of $882.4 million for
2027.
It’s up to the Illinois legislature to authorize municipal
bankruptcies.
Glennon said the General Assembly could also pass an emergency
manager law.
“But the problem is that Springfield, of course, is aligned with
the same politicians in Chicago and the same political interests
that have gotten us into trouble. The wolf would be choosing the
other wolf to watch over the henhouse,” Glennon said.
Glennon said the Michigan legislature appointed an exceptional
emergency manager in Kevin Orr to lead Detroit out of
bankruptcy.
Glennon suggested that a financial control panel could be
appointed, as President Barack Obama did to oversee Puerto
Rico’s bankruptcy in 2016.
The panel, however, would not be appointed by anyone in
Washington.
“Even though it's a federal bankruptcy law, the federal
government can't choose that emergency manager,” Glennon said.
In an article he wrote for Chicago Contrarian, Glennon said one
potential bright spot in a Chicago bankruptcy would be that the
cancellation of the city’s infamous parking meter deal could
return hundreds of millions of dollars in revenue to the city.
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