Chicago is struggling to find a private firm willing to take on the job of collecting roughly $90 million in outstanding city debt, a failure that Mark Glennon, founder of Wirepoints.org, says was foreseeable from the start, in a conversation with Dan Proft on Chicago’s Morning Answer.
Proft opened by noting that the Brandon Johnson administration has been unable to attract bidders for a debt collection contract that on paper looks like an easy win, since firms typically keep a percentage of what they recover on the city’s behalf from unpaid tickets and other obligations. Glennon said the plan was flawed from the outset. Unlike typical packages of bad debt, he explained, the default rate on city tickets is close to zero, and any private collector stepping into the city’s shoes would be taking on claims subject to legal defenses, making the arrangement far less attractive than it might appear. He added that the city likely never tested market interest before building the anticipated collection proceeds into its budget, which he called one more example of what he views as a chronically unrealistic budgeting process. Neither man expects the state attorney general to take any action on the matter.
The conversation turned to pensions, with Proft pointing out that Governor J.B. Pritzker regularly claims to have delivered a balanced budget every year in office despite the state, in Glennon’s view, never actually producing one once pension obligations are properly accounted for. Glennon said he is frustrated by press coverage that describes the state as making its required pension payments, noting that figure simply reflects a payment schedule set by the legislature rather than what is actuarially necessary to keep the pension systems sound.
On the subject of Bally’s long-planned Chicago casino, Proft noted that construction has been halted, jeopardizing a project that was expected to send roughly $200 million a year toward the city’s pension debt. Bally’s has accused the city of violating their agreement by greenlighting video poker elsewhere in Chicago, and Glennon said the company likely has a legitimate complaint, since gambling revenue in a market like Chicago can be cannibalized if too many gaming outlets compete for the same customers, a risk Bally’s would have built into its financial projections for the project. He noted the company is also carrying nearly five billion dollars in debt, according to its most recent financial filings, a burden its own disclosures acknowledge could carry serious consequences, a level of transparency Glennon contrasted with what he described as the far looser disclosure standards public entities like the city and state operate under.
Asked about the emerging field of mayoral candidates, Glennon said he sees little in the way of concrete proposals so far, though he expressed some hope that a real debate about the city’s finances could still take shape by the time the election arrives, if only because the fiscal picture is likely to have worsened further by then. He pointed to Susana Mendoza and Maria Pappas as candidates who at least appear to understand the underlying financial issues and business realities the city faces, while stressing he was not endorsing either. He said he has yet to hear any candidate, including those positioned as more moderate alternatives to the current administration, speak seriously about what it would actually take to make Chicago’s numbers work for businesses and residents deciding whether to locate or expand there.
The discussion closed on Chicago Public Schools funding, with Glennon criticizing a recent Chicago Sun-Times editorial by Ralph Martire arguing the district has been shortchanged under the state’s evidence-based funding formula. Glennon, who noted Martire helped author that formula, argued it was designed from the start to create an obligation the state could never realistically meet, allowing advocates to repeatedly claim schools are being underfunded relative to a statutory benchmark built for that purpose.