Chicago’s Recipe for Fiscal Crisis

What’s the most poorly governed city in the United States? Is it  San Francisco, Detroit, New York City, Minneapolis, or Seattle?

How about none of the above. At least if we care about empirical research.

In 2019, I shared a study that put Riverside, California, in last place.

Last year, I shared a report that had Oakland, California, at the bottom.

I’m sure those must be places with terrible governance, but I’m surprised Chicago is not in last place.

It’s been in a downward spiral for years, and you can make a strong case that it has America’s worst mayor.

It also seems to be getting worse rather than better.

Here are some excerpts from a new editorial in the Wall Street Journal.

Chicago…hasn’t had a Republican mayor in nearly a century, making it a showcase for progressive governance. So how do Democrats explain its high crime, fiscal woes, and failing public schools? …The Chicago metro area’s unemployment rate, 6.2%, is the highest of any big city in the country… Boeing and Citadel have fled. …The city budget has a $538 million hole, and there’s a $51 billion pension debt that siphons off municipal revenue. Chicago has a boat-mooring tax, a fountain-drink tax, a parking tax and an amusement tax, on top of a 10.25% combined state and local sales tax. Mr. Johnson has called for adding another $800 million in new levies. …Chicago schools are notoriously awful, and only 21% of 8th graders in 2022 were proficient in reading.

John Tillman makes similar points in a recent column for Fox News.

Every American should pay close attention to what’s happening in Chicago… Barely 12% of the city’s elementary school students are proficient in math, while only 16% are at that level in reading. The math numbers don’t budge by the time they reach high school. The reading numbers fall, to just 14% proficiency. …It’s not for lack of taxpayer funding. Democrats have nearly doubled per-student funding in the last 12 years, yet educational outcomes have plummeted over the same time. …taxpayers are mostly propping up teachers unions… More and more Chicagoans no longer see a future here, with nine consecutive years of population decline. …Chicago has the second-highest sales tax in the country, along with the second-highest property taxes. …Businesses are running from the Windy City, too. …Boeing, Caterpillar, Tyson Foods and dozens of others have all moved their headquarters out of the metropolitan area or downsized their footprint in recent years.

Many local governments have promised too many giveaways (both in the short run and long run) to government unions and those cities then impose high taxes and provide crummy services.

That combination is driving away taxpayers in the economy’s productive sector.

Chicago is an extreme example of this problem. My two cents is that the city is headed toward a fiscal crisis.

What worries me that some politicians in Washington will want to provide a bailout. The obvious answer is no, presumably preceded by some inappropriate words.

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Image credit: Allen McGregor | CC BY 2.0.