Compared to other big cities like Houston, Los Angles, Philadelphia or New York, Chicago fares worse financially in a series of key measures, according to a new report by the Civic Federation.
The study examined Chicago’s relative performance from fiscal years 2007 to 2011 in four areas of financial condition, including cash solvency, budgetary solvency, long-run solvency and service-level solvency, to see where it ranked relative to 12 other major U.S. cities. By examining a range of fiscal metrics, the Civic Federation sought to get more comprehensive of each city’s true financial picture.
Despite a majority of the cities having experienced deteriorating financial condition during the five-year period, only Boston and Detroit fared worse than Chicago by these measures. The 12 other major U.S. cities analyzed were Baltimore, Boston, Columbus, Detroit, Houston, Kansas City (MO), Los Angeles, New York, Philadelphia, Phoenix, Pittsburgh and Seattle.
The study found:
- Cash Solvency: Chicago’s ability to generate financial resources in the short-term has declined, indicating a weakened, although still generally healthy cash solvency.
- Budgetary Solvency: Chicago’s budgetary solvency declined over period, suggesting that the City may have difficulty maintaining its current level of services with its existing revenue structure.
- Long-Run Solvency: The city faces significant challenges in meeting its existing long-term obligations, due in part to a high proportion of governmental expenditures is being allocated to debt service.
- Service-Level Solvency: Expenses per capita, liabilities per capita and taxes and fees per capita have all grown, indicating an imbalance between the service expectations of taxpayers and the city’s ability to adequately fund those expectations.
“Chicago’s relative financial performance during this period was defined by many of the same challenges it faces today including a structural deficit and high debt levels,” Civic Federation President Laurence Msall said in a statement. “These threats continue to handicap Chicago’s performance as many other cities were somewhat better equipped to weather the 2008 financial downturn and resulting economic challenges.”
The study also noted that Chicago’s real liabilities grew by $7.8 billion over the five-year period, primarily due to cumulative pension funding shortfalls which increased by 112.0% or $2.8 billion after depreciation.