A new report finds the state of Illinois in general, and Chicago in particular, are in the worst financial health in the entire country — surprising absolutely no one
The Reason Foundation crunched the numbers from America's 100 biggest cities and calculated them for their financial health, and Chicago wound up at the top of the worst of the worst list.
Reason Foundation Research Director Geoff Lawrence found Illinois to be in terrible financial shape with a debt ratio of a crushing 276 percent, according to The Center Square.
"It has way more debt than assets, $80 billion in total assets versus $220 billion in debt, so if you were to try to liquidate all of the state's assets to pay off all its debts, it would be impossible," Lawrence said.
But it gets even worse when you drill down to the city level with Chicago citizens who are overburdened with city, county, and state, not to mention federal debt putting the Windy City in a worst-case scenario.
"In addition to what you owe to the federal government in terms of outstanding debt per citizen, you owe substantial amounts as well to every level of local government," the researcher explained.
Unfortunately, City Hall keeps digging itself deeper in the hole day in and day out.
"They outspent revenues by about $580 million in the last year for which we have data,” Lawrence noted.
Reason Foundation rated localities on eight red flags and Chicago immediately earned seven, only missing the eighth by a narrow margin.
Chicago owes $77 billion against a mere $49.8 billion in assets. On top of that the Chicago Public Schools debt is more than $93,000 per student, the Reason study finds.
Chicago would have to spend the next decade severely cutting spending to reverse this problem and to prevent municipal bankruptcy, but clearly city leaders have no desire to do so.
"When considering the effect of overlapping jurisdictions, the most financially tenuous place in America is clearly Chicago, where the city exhibits seven red flags while the school district exhibits five, Cook County exhibits three, and the state of Illinois also exhibits three," the Reason report concludes.
Unfortunately, bankruptcy may not even work for Chicago. As Chicago Contrarian reported early this month, the typical Chapter 9 bankruptcy code might not work because the city fails to satisfy the requirements to climb out of its financial hole.
It may not work because, "A successful bankruptcy requires a credible plan for the future and enough available revenue, disposable assets, and politically acceptable savings to make the plan work. In other words, a city must have enough to work with. It is not clear that Chicago does," Mark Glennon wrote September 3rd.
The city's credit ratings have also suffered, despite a brief uptick in 2022. As the Wall Street Journal pointed out in August: "Structural budget deficits, political disorder and ballooning payments on pensions and debt service have prompted three ratings firms to downgrade Chicago’s credit since January 2025 — to levels two or three notches above junk. Moody’s last summer lowered Chicago’s outlook to stable from positive while maintaining its rating one notch above junk."
The situation does not seem to be getting any better with Mayor Brandon Johnson constantly at odds with the City Council over spending and budget plans. Johnson has become one of the few Chicago mayors who seems to have no sway whatever over the City Council. After decades of strong mayors, Johnson simply doesn’t measure up. It seems rare, indeed, when he can get his initiatives passed with anything less than a titanic struggle.
One is tempted to surmise this financial quicksand is one of the big reasons Johnson has still not publicly stated whether or not he intends to run for re-election.
Regardless, the solution to all this is heavy budget cutting and disciplined spending. But this seems well beyond the capabilities of either Mayor Johnson or the aldermen.
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