Lawmakers in Chicago Suburb Can’t Explain Fiscal Insolvency

Published March 14, 2016

Independent audits of the finances of Harvey, Illinois, a suburban city about 25 miles south of Chicago, show the city is insolvent, and lawmakers are unable to provide auditors with documentation of how taxpayer money has been spent.

According to auditors from the Civic Federation (CF), a nonpartisan research organization working to maximize the quality and cost-effectiveness of government services in the Chicago area and throughout Illinois, the City of Harvey, which was featured in The Blues Brothers movie, does not have enough assets to meet its financial obligations. CF says spending exceeds revenue by at least 10 percent.

Harvey lawmakers and city officials, such as Mayor Eric Kellogg, have racked up at least $59 million in debt, or about $2,500 per resident.

Fiscally Opaque

Bill Bergman, director of research at Truth in Accounting, says Harvey lawmakers have made it difficult for taxpayers to examine their city’s finances.

“It is curiously difficult to find Harvey’s Comprehensive Annual Financial Reports, either on the city’s own website or … at the State of Illinois’ comptroller’s website,” Bergman said. “The latest report on the city’s own website is for 2009. That report, in fact, included an independent auditor’s report, as it should, albeit with a qualified opinion: The auditor cited a material deficiency in pension reporting as the reason for not giving the city a clean opinion.”

‘Layers of Local Government’

Andrew Nelms, deputy state director for the Illinois chapter of Americans for Prosperity, says the fragmented nature of local governments in Illinois undermines accountability.

“It’s not simply municipalities,” Nelms said. “We’re also talking park districts, library districts, streetlight districts, mosquito abatement districts, and a whole host of other units of local government that are all levying property taxes on homeowners. An individual homeowner might have to deal with many of these layers of local government. I don’t think the negative effect can be overstated. If you are a homeowner or a business owner, if you’re looking at places to locate, why in the world would you go somewhere that’s so openly hostile?”

Nelms says Illinois taxpayers, like those in Harvey, are being pushed to the limit.

“Illinoisans are paying the second-highest property taxes in the country, have the second-highest outward migration in the country, and these municipalities are looking at every possible revenue avenue, but they’re certainly not looking at any way to reduce the expenses to the homeowner,” Nelms said. “The homeowner whose home is diminished in value and whose household income in inflation-adjusted dollars is certainly not what it used to be, is being asked to forfeit more of their hard-earned money to fund our worst-in-the-nation fiscal government.”

Michael Bates ([email protected]) writes from Tulsa, Oklahoma.