Our View: Municipal debt
February 25, 2013 6:48PM
Updated: March 27, 2013 6:13AM
Amid all the concern about the State of Illinois’ huge pension debt and inability to timely pay its vendors, there’s another fiscal time bomb ticking loudly — the growing debt of many cities and villages.
Unlike many states, Illinois does not impose limits on how much debt “home-rule” towns can incur or require that they hold a referendum on borrowing more money. Towns with populations of 25,000 or more automatically get home-rule power, which gives them uncapped borrowing authority.
Smaller towns can gain home rule via referendum, and quite a few in Lake County have become home-rule towns.
Able to spend freely, many towns eagerly did so before the recession and now are struggling with oppressive debt levels, having to continually raise their property tax levy to reduce their bond debt. This situation cries out for reform, ideally in limiting home-rule power, which is likely a long shot in the Legislature because of strong resistance from the municipal lobby.
But House Republicans have introduced a bill that deserves to pass — requiring local governments to reveal publicly their total debt, including unfunded pension costs.
State Treasurer Judy Baar Topinka gets credit for pressing the issue, urging taxing districts to provide her office with their debt data, which she wants to post on a new Web site from the state treasurer’s office.
The House GOP bill would make that a legal requirement and also would establish a state committee to review taxing and borrowing of local governments throughout the state and suggest changes.
We hope the Democrats who rule the Legislature back the bill. Let’s shine a bright light on the growing issue of municipal debt.