How much money does your town (and therefore you) owe?

Many suburban residents are deeper in debt than they believe.

Besides credit cards, mortgages and car payments, many suburban taxpayers are also on the hook for millions of dollars borrowed by the towns they call home. Municipal debt plays a significant part in the amount of taxes and service fees residents pay to their hometowns.

A Daily Herald analysis shows 72 suburbs across six counties owe nearly $4 billion combined. There are also six suburbs that have no debt, according to the most recent financial audits of those towns.

The debt burden on residents varies. On a per capita basis, Rosemont leads the pack — by far — with debt amounting to $120,338 per person. The next closest is Itasca, where the debt amounts to $9,690 per person.

At the bottom is Round Lake Heights, where the village's debt amounts to just $114 for every resident. Elburn, Grayslake, Lakemoor, Sleepy Hollow, Warrenville and Wood Dale reported no long-term debt in the most recent audits.

“It is important to look at debt per capita because it can show a trend,” said Laurence Msall, president of The Civic Federation, a government research organization. “You want to examine if debt is growing faster than (property) values and if we're putting a greater burden on future years.”

On top of the municipal debt, a recent study by a national budget reform group reported that Illinois is among the top five states with the highest per capita state debt.

“It is the individuals and families who will ultimately bear this horrific financial burden if state governments do not get their budgets under control,” said Bob Williams, president of State Budget Solutions.

Rosemont's debt stands at more than a half-billion dollars, with more than a third tied up in interest costs. The tiny village of 4,202 people borrowed heavily to cover infrastructure costs associated with its burgeoning entertainment and shopping district.

“In a nutshell, Rosemont is not concerned about its debt load,” said spokesman Gary Mack. “Even in the face of the recession Rosemont has done very well. Rosemont is very comfortable in the belief that the debt can, and will, be paid off.”

Merrill Ring, Rosemont's longtime financial adviser, said the debt the village took on was an investment in economic development.

“Most developers need some kind of incentive to locate in your area, so the bonds are sold to establish infrastructure,” Ring said. “Speculative development is nonexistent in Rosemont. If there had been a failure, you would see a skyrocketing (property) tax increase in the village, and that's hardly the case.”

Rosemont's decades-old tradition of abating residential property taxes is expected to continue unimpeded, village officials said.

Msall agrees that Rosemont is different from most other suburbs because of its enormous commercial tax base, but he warns that borrowing to spur economic development is risky.

“Communities get into trouble when they attempt to forecast economic development being attracted to certain infrastructure developments,” he said. “If that growth doesn't occur, it puts undue burden on existing taxpayers.”

Rosemont also has home-rule authority, which among its many powers allows village officials to borrow an unlimited amount of money. Suburbs without home-rule powers are limited to borrowing a percentage of the municipality's combined property values.

“Debt needs to be tied to an articulated plan,” Msall said.

Itasca's debt of $83.8 million is mainly tied to the construction of a new wastewater treatment plant last year. Because it's relatively new debt, almost 40 percent is tied to interest costs. Village officials anticipate the debt will be paid off mostly by fees charged to water users — fees that were increased to help cover those borrowing costs.

“Its timing ended up not being so great,” said Village Manager Evan Teich, mentioning other recent water rate hikes passed on to village residents by Chicago and the (DuPage) Water Commission. “But it was always contemplated that this plant upgrade was necessary for any future development and the redevelopment of parcels.”

Municipal debt information is available in annual audits called comprehensive annual financial reports. The reports are available on most towns' websites. Besides debt totals, the reports break down year-to-year repayment costs and the type of debt incurred by the towns, among other details.

The majority of overall debt compiled by the 72 suburbs analyzed — 62 percent — is debt that relies on property taxes to generate funds for repayment. Other debt, usually for water and sewer infrastructure, is covered by user fees.

Debt that is backed by property taxes can be riskier because municipalities rely on that revenue for many different things. Msall said it's important that debt doesn't outlive whatever it was used to fund.

“It's fine to stretch repayment as long as the life of the asset exceeds the time it takes to repay the debt,” he said.

All of the nearly $77 million owed by Elk Grove Village will come from property taxes. The majority of the debt stems from the construction of a new village government complex a few years back, officials said.

The village's property tax levy has increased almost 35 percent in the past five years, but those costs come from the village's pension obligations, officials said. As pension costs have grown, the village's ability to use more property tax revenues to lower its debt has decreased.

“You can only tax at such a rate,” said Elk Grove Village Mayor Craig Johnson. “Our levy would be lower if we didn't have pension costs growing all the time. That said, we've done a great job balancing the needs the government has against the cost to people that have to pay for those needs.”

Borrowing is not a requirement to operating government, though.

Warrenville has no debt. City officials have traditionally forgone long-term borrowing in favor of raising rates for specific needs as they arose.

“We believe in pay as you go,” said City Administrator John Coakley. “There's nothing wrong with the philosophy to let the generation using something pay for it. We're not pushing those costs to all future generations.”