Of nearly 500 suburban Cook County government bodies, Evanston is in the unenviable spot of being in the top 20 in its ratio of debt to operating revenue.
That’s one data point from a report issued Thursday by Cook County Treasurer Maria Pappas, which says Evanston’s total debt of $368 million is 391 percent of its annual operating budget revenue of $94 million.
The report also says that that debt amounts to a total of $4,736 for each resident of the city.
By comparison the municipal debt burden for Skokie residents is $1,005 per capita, and it’s $3,837 for residents of Wilmette.
The Evanston figures themselves aren’t new. You could find them in the city’s Comprehensive Annual Financial Report.
But the comparison with other communities offers at least a starting point for putting the numbers in context, and explains why one of the themes of the budget debate at the Civic Center this fall was trying to reduce the amount of debt the city takes on to fund capital improvement projects.
And, in fact, the Comprehensive Annual Financial Report shows that the city’s total liabilities declined slightly — from $377 million in 2008 to $368 million in 2009.
Rating services, in reviewing city bond issues, have freqently noted the city’s high debt level, but describe it a “manageable.”
Typical was this comment from Fitch Ratings last July: “Overall debt ratios are manageable at $4,030 per capita and 3.5% of market value especially given the community’s relative affluence. Principal amortization is rapid with 75% repaid within 10 years. The city’s five-year capital improvement plan includes $74 million in bonding for a host of capital improvement projects and debt levels are expected to remain affordable.”
In the past city officials have also noted that Evanston provides a broader array of services than many other local governments — for example operating parks programs and libraries that frequently are run by separate taxing districts elsewhere, as well as operating its own water plant and three parking garages.
That means that in addition to the general fund revenue cited in the County Treasurer’s report, the city has other revenue sources that brought its total revenue to $167 million in 2009.
Evanston Debt Level
Evanston’s debt to operating budget is about 4.5 times as much Skokie’s. That in itself says volumes.
Specious comparison of total debt to general fund budget
Simply comparing Evanston’s total debt to the General Fund operating budget against other communities leads to false conclusions. Evanston’s total operating budget for FY2010-11 is over $224,000,000. Wouldn’t this be a better number to use for comparison purposes? Unlike Evanston, Skokie does not have debt service on a water utility (they don’t have one) nor do they generate revenue by selling water to other communities to pay off that debt.
Talk to the treasurer
You’d need to talk to the county treasurer about that. Her report used general fund operating budgets for comparisons across communities.
I agree that using that metric makes Evanston’s debt load look bigger. But making the change wouldn’t make Evanston’s debt load look small.
The average debt to general fund budget ratio for all governmental agencies in the report was 107%.
Using your number — which includes $28 million in inter-fund transfers that probably should be excluded — would still leave Evanston with a 164% debt to spending ratio.
Before making the same adjustment for other communities, that would still only move Evanston from the top 20 to the top 100 of nearly 500 governmental entities in the indebtedness ranking.
Giving the same break to all other towns could only edge Evanston back up in the high-debt rankings.
“Real” Evanston Debt Level-Get your bottle of Scotch
Before reading the following comments, you may want to have a couple of drinks…
…the reported numbers of $368mm of debt or $4,736 per capita are concerning on the surface, especially relative to our operating budget(tax revenues) and other communities. However, the real kick in the teeth is that these numbers don’t appear to take into account our unfunded Fire and Police pension liability which is last reported at $175mm (please, please, tell me i’m wrong)
As an Evanston Taxpayer, i and you, are liable for several "layers" of debt. While there may be many different taxing bodies, the money all comes from one place – MY and YOUR PURSE/WALLET. Have another drink before reading on…
…So if you really wanted to know how much debt you as an Evanston taxpayer are on the hook for, you have to add up : Evanston City (Outstanding debt + unfunded pension liabilities-fire, police, IMRF + unfunded healthcare liabilities) + Schools(D202 and D65 including debt and unfunded pension + healthcare liabilities) + Cook County(Debt and unfunded pension + healthcare liabilities) + State of Illinois (Debt-this is MASSIVE + unfunded pension-even more MASSIVE + healthcare-HUMONGOUS) + Federal Debt and Pension etc-HUMONGOUSLY MASSIVE.
Now do you see why our country has a major problem? And it will take a long time and a lot of work to fix…my calculator just broke, so I’m going to have another drink.
Seriously, the Evanston Finance Manager, Marty Lyons, should quantify these numbers for the community. This is a major issue for Evanston, the State of Illinois, and our country.
P.S. these debt numbers do NOT include our mortgage and credit card debt
Debt and pensions
I checked with Assistant City Manager Marty Lyons, and he says the debt numbers in the Pappas report do not include the public safety pension debt.
You confirmed my worst fear…
…I think i’ll open another bottle.
Numbers answer councils’ questions
I remember during the discussion of the debt problem – alderpersons ask ed staff to show them a comparison to other communities. No news here, we were at the top there also.
The city has no handle on its capital program – if you listen carefully – they kept on asking the council for approval without discussion, since they are not prepared to present it. The real problem is lack of fiscal controls in place to create the numbers, creating a huge task to present the numbers.
How much of the debt was waste and mismanagement of the capital program? A conservative estimate is 10 to 20 percent. 30-40 million dollars of the total.
The debt numbers do not take into account the pay back cost – it a safe guess that the taxpayers here if they every pay the entire amount off – would have to shell out well over 1 billion dollars! ( to pay up the pensions and capital debt ) – a very interesting Ponzi scheme.
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