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Old 05-19-2015, 12:10 AM
 
1,478 posts, read 2,399,541 times
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Quote:
Originally Posted by marothisu View Post
Hate to break it to you, but most big cities in the US are in debt. NYC is over $100 Billion in debt or at least was as of a few years ago.
To be fair though, among large cities, Chicago's debt burden is about as bad as it gets currently.

The problem is serious, but people are missing the point when they compare Chicago's problem to Detroit's and they're paying to much heed to the back and forth with the state on the issue. The state can say what it wants about not helping out, but they made this mess together. Detroit as a job center isn't as important to MI and Chicago is to IL. Seeing beyond the political bluster (and frankly all of this should have occurred years ago), when a deal gets struck, the state will need to step up to the plate as well. If the tax situation gets screwy on the corporate end and companies look to pull up stakes, they won't just be looking to move to the suburbs. If they're looking to move, they'll leave the playing field wide open and find the best spot anywhere. IL can't risk that.

The other thing to consider is that if property tax rates need to spike as part of this, people need to consider who that impacts most financially. Property taxes go up and housing prices go down. The upper middle class and wealthy will ride it out, provided there is a deal that says, "The state is chipping in X, we are cutting Y, we will restructure Z, and property taxes are going to suck for 5 years". The working class and standard middle will get forced out. Poor families will continue to leave and older poor will continue to age in place and die. Who will jump on the opportunity to buy if prices tumble? The same people who bought when the housing market tanked a few years back. People with money. If a 600K place can be had for 500K, you can bet people will be all over that.
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Old 05-19-2015, 05:09 AM
 
Location: Chicago
6,359 posts, read 8,760,614 times
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Quote:
Originally Posted by marothisu View Post
Hate to break it to you, but most big cities in the US are in debt. NYC is over $100 Billion in debt or at least was as of a few years ago.
all cities and states are in the same boat. money just doesn't flow down from DC anymore. the problem, as you note, is national.
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Old 05-19-2015, 08:28 AM
 
Location: Upper West Side, Manhattan, NYC
15,331 posts, read 23,764,559 times
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Quote:
Originally Posted by Chicago76 View Post
To be fair though, among large cities, Chicago's debt burden is about as bad as it gets currently.
I don't know what NYC's debt is today, but a few years ago it was over $100 Billion which is actually proportionally worse than Chicago's debt burden if that holds today. I think Chicago is somewhere in the low $20 Billion. NYC is 3X the size - so if Chicago was worse than NYC, at least of a few years ago, the debt burden of NYC would be over half of what it actually is.

There's a reason why residents of NYC (and those like me who make money there) pay extra income tax for the city itself on top of the state's income tax. If you make over about $20,000/year there, you have to pay an extra at least 3.5% income tax on top of the state's income tax (which for most people is 6 or 6.5% itself). So essentially, imagine if 80% - 90% of the income tax for all people in the Chicago metro area went towards Chicago only and none towards the state.

Last edited by marothisu; 05-19-2015 at 09:11 AM..
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Old 05-19-2015, 08:38 AM
 
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Quote:
Originally Posted by chet everett View Post
In New York City there are some regulatory policies in place that make this attractive. Illinois has no "millionaires' loop holes" and thus the advice that any sane financial planner gives their wealthy clients is simple: "DON'T DO IT!".

There is only a property tax break for primary owner occupied residences in Illinois and combined with unfavorable tax treatment for the rest of the costs associated with a second home in Illinois one needs to be a little nuts to go down this path. It is probably cheaper to have a 5 star hotel suite even 30 or more nights a year than try to justify a second home. Especially since one can get from some place like Oak Brook to the nicer spots downtown / near north in well under an hour off-peak there is really no benefit in this sort of arrangement...
Some people buy second homes with about as much thought as I buy the newspaper - and it has about that much effect on their bottom line.

Still, with an unlimited budget, I'd have one place in Chicago and one in a warm climate (I already do, but the warm-climate place is rented).
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Old 05-19-2015, 10:31 AM
 
11,973 posts, read 31,635,920 times
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Quote:
Originally Posted by marothisu View Post
Based off of what? Both the city and suburbs have been seeing economic growth lately. The median household income and 6+ figure households have been increasing at a good rate relative to housing growth (2010 to 2013) too in the city itself - actually at a higher rate than San Francisco believe it or not and a little lower than NYC (LA is increasing more than NYC, SF, and Chicago).
I'm not sure you understood my comment, as I was not trying to say that the burbs would surpass Chicago. I believe that Chicago's CBD will continue to be the largest node of economic activity in the region, linked to numerous smaller satellite nodes. I brought up Detroit as a worst-case scenario where the secondary nodes have surpassed the original central city, but don't think that will happen in Chicago unless there is some sort of financial apocalypse (which some are predicting, but I still believe to be unlikely).
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Old 05-19-2015, 11:17 AM
 
1,478 posts, read 2,399,541 times
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Quote:
Originally Posted by marothisu View Post
I don't know what NYC's debt is today, but a few years ago it was over $100 Billion which is actually proportionally worse than Chicago's debt burden if that holds today. I think Chicago is somewhere in the low $20 Billion. NYC is 3X the size - so if Chicago was worse than NYC, at least of a few years ago, the debt burden of NYC would be over half of what it actually is.

There's a reason why residents of NYC (and those like me who make money there) pay extra income tax for the city itself on top of the state's income tax. If you make over about $20,000/year there, you have to pay an extra at least 3.5% income tax on top of the state's income tax (which for most people is 6 or 6.5% itself). So essentially, imagine if 80% - 90% of the income tax for all people in the Chicago metro area went towards Chicago only and none towards the state.
There's a problem in your numbers in that they aren't apples to apples. NYC's number is "all in", which includes transit, sewer, all bond issues, and unfunded pension liabilities for all types of city employees, even if the pension doesn't fall directly under municipal finances (such as teachers). Their figure is $110 billion. This is everything at the city/borough level on down. Per person, Chicago's obligations are 1.8 times the size of NYC's

The same figure for Chicago is $65 billion, so per household or per person, Chicago's burden is higher. You could argue that things outside of Chicago's direct authority, such as sewer (handled at the county level), shouldn't be included, but the problem there is that the city's residents must pay for it and they feel the burden. A dollar spent by residents on sewer is a dollar that can't go to the city's debt crisis. This is why ratings agencies look at debt coverage, ie, what they take in vs. what they are obligated to pay.

NYC has far greater ability to pay than their population advantage would indicate: more income, greater property values, more tourism dollars, non-residents owning and paying property tax that does not burden residents, a bigger corporate base, and so on. That's why they are rated by the agencies at higher grades.
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Old 05-19-2015, 11:34 AM
 
Location: Upper West Side, Manhattan, NYC
15,331 posts, read 23,764,559 times
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^ You're right - for some reason I thought it was in the low $20 biillions. Regardless of this, and I'm not trying to take away from Chicago's problems because they aren't light, but most large cities in the US are in debt right now. LA has the least out of the largest 3 cities, but still in debt by a handful of billions.

And I bring up NYC because they have a big debt as well, and their solution in the past has been taxing the residents of the city even more on their income (out of other solutions). In that regard, Chicago is lucky so far with income taxation - but we'll see how they come up with fixing things.
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Old 05-19-2015, 12:32 PM
 
Location: Schaumburg, please don't hate me for it.
955 posts, read 1,820,780 times
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Quote:
Originally Posted by marothisu View Post
Hate to break it to you, but most big cities in the US are in debt. NYC is over $100 Billion in debt or at least was as of a few years ago.
The point intended was the sustainability of Chicago vs. suburbs. Few of Chicago's suburbs have this kind of debt problem.
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Old 05-19-2015, 01:05 PM
 
28,455 posts, read 84,957,533 times
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Default None of the do. The legislature does not allow it...

Quote:
Originally Posted by williepotatoes View Post
The point intended was the sustainability of Chicago vs. suburbs. Few of Chicago's suburbs have this kind of debt problem.
The fact is that the political schemes that Chicago has engaged in for quite some time seems specifically designed to shift the "burden" of failing to adequately fund Chicago's uniquely structured pension debt onto the backs of tax payers across the rest of the state.

One can argue about the degree to which Chicago already picks the pockets of the rest of the state regarding the various kinds of special legislation that props up the CTA or CPS or even the retirement of funds of Chicago's cops & fire fighters, but the facts are that the funding of the statewide TRS and IMRF systems have never let the member districts / municipalities skip payments the way that Chicago has.
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