By: Mark Glennon*
“We have more than sufficient cash on hand, and we prepared for a potential economic downturn as part of the projections we released last year for our 2020 budget.” That’s from Mayor Lori Lightfoot’s speech to the City of Chicago Thursday evening.
Is it true? We’ve been trying to assess Chicago’s cash situation for several weeks. If you try as we have you will be frustrated.
The primary source for that information should be the office of the City Treasurer, Melissa Conyears-Ervin. That office is custodian and manager of all cash and investments for the city. It’s responsible for maintaining all records and accounts associated with the city’s operating funds and escrow accounts. The treasurer is also chief investment officer for the city and responsible for managing its investment portfolio.
Their site is worthless respecting those functions and anything about liquidity. Sure, you will find information about financial empowerment, ESG – social justice — investing, the Community Catalyst Fund and the like, but anything such as a list of investments or summary of some kind?
You should expect to find at least something like the Illinois Treasurer has always published, showing total cash on hand and how it is invested, which is updated monthly. But go to the “Financial Transparency” tab on the Chicago Treasurer’s site and there’s not a single piece of financial information.
Is anybody even home at the office of the Chicago Treasurer? I emailed the office two weeks ago – before the Coronavirus slowdown — for information or where to look and received no response.
Nor will you find much of use on the sites for Chicago’s Office of Management and Budget or investor relations. Surely the tab for “Liquidity” on the investor relations site would have something on the current cash situation, right? Sorry, the last document there is from 2018.
Yes, you can find documents like the city’s last financial statements – the CAFR – but it is for 2018. Too old. And there’s the last Budget Overview – but it’s from last fall and provides nothing useful about the city’s current cash situation.
About the only information you will find addressing Chicago’s current lquidity is in Yvette Shields’ recent article in The Bond Buyer. It’s no doubt accurate, but it’s written to address the concerns of bond owners which are very, very different from those of service recipients and taxpayers.
We are not going to try now to assess exactly how dire Chicago’s situation is because, aside from not yet having the information we need, the situation is so fluid and deteriorating so rapidly. Almost all the city’s revenue sources are getting slammed, as is happening around the country. Suffice it to say that, unless the economy’s near standstill ends very soon, the situation will be extraordinarily serious, and Chicago won’t be alone.
We suspect Lightfoot’s real hope, which some other Illinois politicians have said privately, was tipped off in this line from her Thursday speech: “This is a B-sized problem, meaning something that can only be solved with billions in needed stimulus support from the federal government.”
A federal bailout, in other words.
Good luck with that. We will be writing more on that and putting all our effort into getting the information we can to assess the effect of the crisis on Chicago, the state and its other municipalities.
*Mark Glennon is founder of Wirepoints.