City of Evanston Blog
Debt and the Chicago Tribune
The Chicago Tribune newspaper is an expert on debt on many fronts. Unfortunately a recent editorial by the Chicago Tribune on local government debt got it wrong about Evanston. Below is the text of a Letter to the Editor Mayor Tisdahl sent today to the Tribune:
Dear Editor:
I am writing to express my concerns about the incomplete information contained in your December 3, 2010 editorial regarding debts and liabilities held by the City of Evanston. The editorial listed all of our debt and not all of our revenues. The editorial contained the following information about the City:
“Evanston lists debts of almost $368 million as of 2009, but operating revenues of $94 million. Each Evanstonian's share of those liabilities is a bracing $4,736 — and that's for municipal government alone, not schools and other local taxing bodies. The city could barely pay off its debts even if it didn't spend one dime on anything else for four years.”
The $368 million figure represents all liabilities of the City, both governmental and business-type activities. Simply stated, the liability amount includes the City’s business-type activities, such as the water, sewer and parking funds. These activities are not supported by the general taxpayers of the City of Evanston. They are supported by ratepayers. Thus, of the $368 million liability figure, approximately $160 million is for debts and liabilities held by these business-type activities, leaving approximately $200 million for governmental activities.
Second, the $94 million figure reflects revenue for only general governmental activities for the 08-09 fiscal year. According to the City’s audit for that year, total revenues for the same fiscal year from all governmental activities were approximately $166 million.
A further review of the $368 million debt amount shows that $280 million or 76% relates to debt to maintain or improve capital assets for both governmental and business-type activities. In your editorial, it was stated that this type of debt is reasonable and is similar to individuals taking out mortgages.
The City of Evanston has worked diligently to be good stewards of tax payer resources. This is demonstrated by a AAA bond rating for the City. However, we agree with the general premise of the editorial that all government agencies, including the City of Evanston, must be mindful of the debt incurred for all aspects of municipal services. In that spirit, Evanston has taken steps to reduce its debt over the last two years, reduce borrowing and will continue to carefully monitor all its financial operations in the future.
Sincerely,
Elizabeth B. Tisdahl, Mayor
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