In a written statement issued yesterday, Chicago's Chief Financial Officer Gene Saffold pooh-poohed the news that Fitch Ratings is downgrading
Chicago's bond rating on billions in outstanding general obligation
bonds. Saffold said the city didn't believe the decision "will have a
significant impact on our long-term borrowing costs," mainly because
officials at City Hall see the financial crisis as the main driver of
Chicago's budget woes.
That's true enough. Like the state and
municipalities nationwide, Chicago has seen its tax revenues dip
sharply over the past two years. But the report underlies some fundamental problems with the city's budget practices. Fitch specifically criticized Mayor Daley's decision to use
reserve funds (like those created by the parking meter and Skyway
privatization schemes) to cover operating expenses over the last
several years. Those operating deficits wouldn't be so high if the city
hadn't siphoned off so much property tax revenue into its tax increment financing "shadow budget," either. Over 90 percent of Mayor Daley's own property tax bill, for example, is tossed into that fund instead of toward regular taxing bodies. In other words, there are reasons why Chicago's long-term outlook is "negative" while those of other cities remain stable.