Chicago tries art of fiscal juggling
By Lucia Mouat, Staff correspondent of The Christian Science MonitorChicago
For a growing number of cities, the job of keeping bills paid and budgets balanced is evolving into a highly skilled juggling act. Faced with less money from Washington and taxpayer resistance to further property tax hikes, many cities searching for new sources of revenue are pioneering in what might be called creative taxing and borrowing. Just as home owners have had to resort to imaginative financing to sell their property, so cities find they are constantly pressed to devise new income strategies to pay for the daily services they must provide.
Chicago, while regarded as in far better financial shape than New York, Cleveland, or Detroit, in many ways exemplifies the new juggling strategy at work.
The city has been having a particularly tough time of late in financing its school and mass transit operations. Chicago Mayor Jane Byrne's fund-raising strategy, which reaches for a new detour as fast as roadblocks appear, makes headlines here on an almost daily basis. The result has left some Chicagoans trying to follow it a bit breathless. As one recent editorial in Chicago's sun Times put it: "We prefer less excitement and more dull stability."
One of the key new difficulties that Chicago and other cities are beginning to encounter is a poor market for the sale of many municipal bonds at rates offered. Just last week Chicago offered $140 million in municipal notes intended to finance transit operations through next March. Almost as swiftly, they were withdrawn. A key reason: public demand at the price and interest rate offered was not there.
New York's Citibank, the main underwriter of the offering, says it expects the notes to be back on the market in four to six weeks when market conditions are better and legal issues surrounding the sale are resolved. But some city fiscal experts, such as Donald Beatty, executive director of the Municipal Finance Officers Association, say they think market conditions for bonds mary remain tough for some time to come.