Fearing local officials would borrow their way into bankruptcy, most states enacted safeguards aimed at making sure officials don’t bite off more than their taxpayers can stomach.
And Illinois would have similar rules, but lawmakers have failed to act for decades.
That frustrates a longtime major backer of local control: former Illinois Comptroller Dawn Clark Netsch. She said she and others who framed Illinois’ broad constitutional powers for so-called home rule towns never wanted officials to abuse the borrowing power, and they assumed lawmakers would set a proper limit.
“As much as I believe in home rule, I thought you always need some lever at the state level for the state to step in and say, ‘You’ve gone too far,'” Netsch said.
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Still, there is little outward support among local officials for a local debt limit. Before the 1970 constitution, Illinois used to have strict limits. Some municipal officials say they don’t want to return to times when limits unnecessarily constrained officials who didn’t abuse the power.
They include Ken Fritz, who manages Schaumburg, which owns an airport, minor league baseball stadium and hotel and convention center. Fritz said it is “something the community should decide, not the state.”
But that’s not how most other states handle the issue.
From New York to Washington state, municipal officials are restricted in how much they can borrow. Often times they are also required to get voters’ OK.
Officials in several states surveyed by the Tribune said the safeguards haven’t stopped local officials from meeting their residents’ needs.
For example, Indiana’s 1851 constitution limits property tax-tied debt so strictly that Chicago and more than 100 suburbs come in above the restrictions. And Indiana residents often get a vote on such debt below that limit.
“Have people really complained? No, not really,” said Rhonda Cook, legislative counsel for the Indiana Association of Cities and Towns. “We have lived with it for so long.”
Washington lets towns borrow to nearly Illinois’ pre-1970 limit. After reaching that limit, towns can borrow only for certain projects and must get voter approval. Even then, there’s a total cap that towns cannot exceed, regardless of voters’ desires.
Washington public finance lawyer Hugh Spitzer, also a government law professor, said local officials rarely complain because “if they hit their debt limit, they have no business borrowing additional amounts.”