By Ted Dabrowski | Wirepoints
Back in March there was good news for Detroit that was bad news of sorts for Chicago, but it seems the entire Illinois media missed it. They may want to finally take notice of that moment now that both the city of Chicago and Chicago Public Schools are once again struggling with potential billion dollar deficits.
The good news in March was that Detroit’s credit rating was upgraded two notches by Moody’s, finally returning the city to investment grade after more than a decade in bankruptcy. Detroit could cheer – it had finally gotten rid of its junk-rated status. For years, the Motor City had the worst credit rating among the nation’s biggest cities.
In getting its upgrade, however, Detroit jumped over Chicago, leaving the Windy City with the embarrassing title as the worst-rated major city in America. Chicago had pulled out of its own junk rating in Nov. 2022 thanks to the benefit of all the federal covid aid, but only a few months later Detroit leapfrogged Chicago.
Detroit’s upgrade is the latest example of how Chicago and Detroit appear to be trading places. Detroit has come a long way since its bankruptcy restructuring, now with a good vibe as a resurgence in its downtown has taken hold.
Dan Gilbert is reported to have put in $2.5 billion into the city and is now building Detroit’s second-tallest skyscraper. Ford is spending more than $900 million to redevelop Michigan Central, the abandoned rail station. Developer Stephen Ross is investing in a $1.5 billion downtown development. It’s going so well that Detroit’s showing it’s possible to reverse the real-estate doom loop.
What perhaps best encapsulates the turn around is that for the first time in 66 years, Detroit grew in population, according to Census estimates for 2023.
Going in the opposite direction is Chicago, stuck with a growing budget mess, already-high taxes, a massive debt burden and a shrinking population – all presided over by an unprofessional class of activists and operators more interested in equity and grievance politics that’s eroding Chicago’s world class status.
The city budget is short some $200 million for 2024 – Chicago has spent more than $350 million on illegal immigrants – and Mayor Brandon Johnson expects a shortfall of $982 million in 2025. Johnson has no real plan for how to cover those deficits and will likely have to resort to property tax hikes – breaking his original promise to avoid raising those taxes. That in turn could spur more flight from a city already struggling with people and business departures.
Chicago Public Schools – a separate government entity from the city – is in an even more dire position. It projects a $1 billion deficit for next year and is already junk rated by Moody’s.
CPS is funded largely by property taxes, so if it wants more money, it too will want its own tax hikes. The district, despite spending more than $30,000 per student, has been bleeding students, with enrollment collapsing by more than 110,000 since 2000 – about a 25% drop. Just 1 in 4 CPS students could read at grade level in 2023. In math, it was just 1 in 5.
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