There is an interesting question contained in the slug (the subtitle) of this post at City Journal on the circumstances that face Chicago: “How it is possible for a city this booming to be this broke?” The author points to multiple developments:
Chicago’s Loop hums with life and commerce today. A parade of companies, including Kraft and Motorola, has moved from the suburbs into the central business district. The greater downtown apartment market is booming, with thousands of new units being constructed. Chicago hotels will add 2,200 new hotel rooms this year to accommodate throngs of tourists. The city has rolled out new amenities and attractions, including an enhanced Riverwalk along the once-polluted Chicago River, and Maggie Daley Park, a fantasy-like playground that replaced the forlorn Daley Bicentennial Plaza section of Grant Park. Also opening this year: a long-anticipated elevated rail trail and a new nature preserve on Northerly Island.
The question is actually pretty easy to answer. These amenities are being built with borrowed money—borrowed from the federal government or financed by issuing bonds. Those will need to be paid back eventually. Meanwhile, while they add to the prestige of the city and, more importantly, the politicians who borrowed the money to build them they don’t bring a lot of revenue into the city.
What does bringing Boeing, Kraft, or Motorola into the city do to enhance revenues? Not a heckuva lot. In fact just about all it does is make the morning commute tougher. Relatively few of the people who work in these headquarters offices live in the city. They may work in Chicago but they live in the suburbs and that’s where they do their buying and that’s where they pay the real estate taxes on their homes. The city doesn’t have a city earnings tax (an income tax paid by people who work in the city but don’t live there) and doesn’t have the power to impose one.
Meanwhile, Mayor Emanuel and the City Council are running our credit rating into the ground (making it that much more expense to borrow) and raising every tax and fee they can to the point where no one will want to live here. Heckuva job.