Chicago’s fiscal problems are not simply the result of insufficient tax revenue. They are also a consequence of the city’s failure to achieve the economic growth needed to keep pace with the rest of the country, according to Wirepoints founder Mark Glennon.
Glennon joined Chicago’s Morning Answer Tuesday with Jeanne Ives and Jim Iuorio, who were filling in for Dan Proft, to discuss Chicago’s financial outlook and the growing challenges facing the city and state.
The conversation centered on a recent analysis cited by the hosts from Chicago Tribune columnist Stuart Loren, who argued that Chicago’s fiscal crisis is also a growth crisis. According to the analysis, if Chicago had experienced sustained economic growth comparable to the national average, the city could have collected more than $1.1 billion in additional revenue in 2025 alone.
Glennon agreed that Chicago and Illinois have consistently lagged behind the national economy on key measures of economic health. That slower growth translates directly into weaker tax collections, he said, because economic expansion generates additional sales, income and transaction-tax revenue.
Glennon said that even relatively modest improvements in economic growth can produce meaningful increases in government revenue. Conversely, when a state or city consistently trails the national economy, the lost growth compounds over time and leaves governments with fewer resources to address their financial obligations.
The problem, Glennon argued, is particularly troubling because Chicago has significant natural advantages that should allow it to outperform the national average. Instead, the city and state have become drags on national economic growth.
Iuorio questioned whether Chicago can realistically reverse the trend, suggesting that the city may eventually become more dependent on tourism while economic activity and corporate investment increasingly shift toward the suburbs.
Glennon said he remains open-minded about Chicago’s prospects but challenged policymakers to produce a credible plan for returning the city to a competitive position. Such a plan, he argued, would have to address both taxes and the quality of government services.
The city’s financial problems also raise questions about how it could restructure its debt if its fiscal situation becomes unsustainable. Glennon said he is preparing an analysis examining whether even a Chapter 9 municipal bankruptcy would necessarily solve Chicago’s problems.
A bankruptcy proceeding would require a credible reorganization plan, Glennon explained. Without a realistic strategy for restructuring the city’s finances, simply entering bankruptcy would not by itself resolve the underlying problems.
The discussion also touched on the financial struggles of Harvey, Illinois, where Glennon said the city has effectively been forced into an out-of-court arrangement with creditors after facing severe financial difficulties.
Rather than formally declaring bankruptcy, Harvey’s creditors and other claimants have had to negotiate over how limited city revenues are distributed. Glennon described the arrangement as a way of keeping litigation at bay while dividing available revenue among competing claims.
Glennon said that type of negotiated restructuring could potentially offer a model for other municipalities facing financial distress. He and Wirepoints previously advocated a process in Illinois that would encourage municipalities and creditors to negotiate before resorting to formal bankruptcy.
Under such an approach, bankruptcy would remain an option if negotiations failed, providing leverage for municipalities to persuade creditors to accept an arrangement based on what the government can realistically afford.
Illinois, however, has not authorized its municipalities to file for Chapter 9 bankruptcy, limiting the options available to cities facing severe financial problems.
Glennon said bondholders should understand the risks associated with lending money to financially troubled governments. He argued that investors who purchase municipal bonds have access to information about the financial condition of the governments issuing those bonds and should bear some of the consequences when those investments go bad.
A restructuring could reduce a city’s debt burden and potentially free up cash, Glennon said, making it possible for the government to obtain better terms on new debt in the future. He pointed to Detroit’s bankruptcy as an example of a municipal restructuring that ultimately gave the city a fresh financial start.
The conversation returned repeatedly to the importance of economic growth, but Glennon cautioned against treating growth as a cure-all for Chicago’s fiscal problems.
Economic growth is necessary, he said, but it will not be sufficient to solve the city and state’s financial challenges by itself. The size of the obligations facing governments is simply too large. Spending reductions and other structural reforms will also be necessary.
Ives and Iuorio argued that Illinois’ tax and regulatory policies have contributed to the state’s weak growth by making it more difficult for businesses and individuals to remain and invest in the state.
Glennon agreed that policymakers cannot rely solely on higher revenues to solve the problem. If additional economic growth simply leads to additional government spending and new programs, he said, the underlying fiscal imbalance will remain.
The interview comes as Chicago and Illinois continue to confront difficult questions about taxes, spending, debt and economic competitiveness. Glennon assessed that restoring growth should be a central part of any effort to improve the state’s fiscal health, but that policymakers will also have to confront spending and structural problems that economic expansion alone cannot fix.
For Glennon, Chicago’s fiscal crisis is therefore about more than finding additional sources of revenue. Without a credible strategy to make the city more competitive and control its spending, he argued, even stronger economic growth may not be enough to put Chicago’s finances on a sustainable path.