It isn't just Chicago; New York City is in big financial trouble too, The Fiscal Times reports:
While Chicago’s place at the bottom of the list is unsurprising, New York City’s position — just one step above — was unexpected. An extended bull market and soaring real estate prices have pumped money into the Big Apple’s coffers. Total municipal revenues rose from $60 billion in 2009 to $81 billion in 2015. But the city has been spending the money almost as quickly as it has been coming in.
At the end of its 2015 fiscal year, the city’s general fund reserves amounted to just 0.67 percent of expenditures — well below the Government Finance Officers Association recommendation of 16.67 percent (equivalent to two months of spending). A city’s general fund is roughly analogous to an individual’s checking account.
Mayor Bill De Blasio has been heralded as the future of the Democratic Party by many progressives. If that's true, Democrats should be nervous. De Blasio's tenure has so far included ongoing corruption investigations, major political missteps, and grandiose unfulfilled promises. All along, he's grossly mismanaged the city's finances. New York has a huge tax base and a thriving economy; there's no reason its coffers should be so depleted. Nor is it totally clear where all the money is going.
It isn't hard to guess, or at least to notice a pattern: Blue governance is costly, and De Blasio's agenda has been as blue as any in the country. Moreover, he's proven adept at feeding political allies—unions, contractors, and the like—in the course of his duties. When you promise more money for education, transit, affordable housing (a rare, if highly qualified De Blasio success), and anti-poverty programs you put yourself in the position of, uh, having to spend more money. And because De Blasio is tied to big labor in a way his predecessor was not, he can't cut costs where they've become the most bloated: in the employment rolls of various agencies.
In all the talk about the efficiency of urban life, there's rarely any mention of the extraordinary costs of city governance. Sure, city dwellers use less CO2 and require less space per person. But maintaining and expanding the environmentally-friendly subway system in New York is a hugely expensive endeavor — just look at the new Second Avenue line. The sanitation departments are bloated. Zoning increases inequality and creates lots of friction for developers. Tax rates are high, and the numbers in many American cities still don't work out.
As Republicans take power in the White House and in state houses around the country, many Democrat-controlled cities are one financial crisis away from insolvency. Either they will have to get back in the black, or they'll soon be going to Republican-controlled legislatures asking for bailouts. New York may avoid that problem while Governor Cuomo continues to run things in Albany, but Cuomo (who, rumor has it, is thinking bigger himself these days) would do well to pressure the city to get its act together. New York has had an incredible run for nearly twenty years. But all good things must come to an end. Better that the end, whenever it arrives, be a short and manageable one.