Cities across Illinois may face financial crisis - FOX 32 News Chicago

Cities across Illinois may face financial crisis

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CHICAGO (FOX 32 News) - A budget watchdog is warning that dozens of local governments across Illinois could soon face a crippling financial crisis.

That comes after federal investigators uncovered a memo from the comptroller of south suburban Harvey, warning it could run out of cash as soon as next month - leaving police officers and other city workers unpaid.

A source close to Harvey Mayor Eric Kellogg insisted the federal Securities and Exchange Commission's 29-page lawsuit is misleading. The SEC quoted a memo written by Harvey's comptroller warning the south suburb could run out of cash in a matter of weeks; leaving police, firefighters and others unpaid.

The source close to Kellogg, though, claimed Harvey does have the cash to meet its payroll. Still, Harvey has a huge pile of unpaid bills: about $20 million, more than half its annual budget of $35 million.

Watchdogs warn that dozens of other local governments could soon face a financial emergency, many involving public employee pension funds on the verge of collapse.

“We have over 600 municipal police and fire funds. Most of them are in dire financial distress. Most of them are putting great financial pressure, even well-to-do communities like Oak Park, Evanston, Elgin. Most are having a hard time providing both good quality government services and maintaining the level of pension benefit that the State of Illinois dictates to them,” said Laurence Msall, President of Civic Federation of Chicago.

Msall said that Illinois should imitate Michigan in creating a state commission to step in when local governments go broke.

The Republican candidate for Governor said he'd appoint a panel of local mayors and school board members to recommend actions.

“Government is too expensive in Illinois. We have 7,000 units of government, more units of government than any other state. And many of our municipalities and local governments are teetering on the verge of financial default. We've gotta turn that around by reducing the overall spending,” said Bruce Rauner.

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