Which suburbs are borrowing the most?

Most towns rely on property taxes to repay loans they take out for everything from new police stations to fixing roads.

http://reportcards.dailyherald.com/gfx/2016/mundebt/

But how much towns have borrowed varies widely across the suburbs, from nearly $300 million in Rosemont to almost nothing in a host of other towns, a Daily Herald analysis shows.

Some suburbs are limited in how much debt they can accumulate.

But there's no cap in home-rule towns, and those suburbs on average had borrowed more, according to the analysis of 91 suburban government audits and additional financial data compiled by Illinois Comptroller Leslie Munger's office.

However, almost none of those towns exceeded the borrowing caps they would have had if they weren't home rule. Home-rule suburbs are those over 25,000 people or where citizens have voted for the status. Voters in towns like Rockford and Westmont have rescinded home-rule powers, though.

Among home-rule suburbs in the analysis, only Rosemont exceeded what would have been its borrowing limit. The village's debt at the end of 2014 - its most recently audited year - was $298.7 million. If bound by the debt limit, Rosemont would have been allowed to borrow only a little more than $51 million.

That likely would have stifled development of the village's lucrative entertainment district, village officials said.

“It would surely put handcuffs on us and we would not be as successful as we are,” said Don Calmeyn, the village's finance director. “We look at debt as an investment.”

While property taxes fund some of the village's debt payments, much of the entertainment district's debt will be paid off by tenants and visitors, officials said.

Most towns don't have an entertainment district to rely on to cover debt repayment. Most rely on property owners. Home-rule communities don't have to ask voters to raise property taxes above the state's tax cap limits, either.

Towns that aren't home-rule have a borrowing limit equal to 8.625 percent of a town's overall property value. Other types of debt paid off with user fees or other revenue sources aren't limited and aren't included in this analysis.

Carpentersville is another home-rule town with a high debt load. The town's borrowing, at $34.2 million, would be at 93.4 percent of its limit if the cap applied. Carpentersville officials borrowed for “public improvements” including infrastructure and roadwork that won't be fully paid off until 2034, according to the village's financial reports.

Almost 20 percent of a Carpentersville property owner's tax bill went toward debt last year. That means the owner of a $300,000 house would pay about $2,750 in property taxes to the village, and more than $500 would go toward debt.

On average, the 44 home-rule communities in the analysis had borrowed 28.4 percent of what would be allowed if the towns' debt was limited. Five home-rule suburbs had no debt that would otherwise be subject to the limit.

Meanwhile, the 47 towns with debt limits averaged just 13.1 percent of what they could borrow, and 13 suburbs reported no debt subject to the limit.

Ann Lousin, a professor of constitutional law at John Marshall Law School in Chicago who was a research assistant at the 1970 state Constitutional Convention when the debt limit was first introduced, called it “a dumb idea.”

She said it limits infrastructure improvements and hamstrings development. Lousin said the state's most successful cities are home-rule communities because they don't have to worry about the debt limit and can “afford to pay for governmental services.”

“They voted out home rule in Rockford in the '80s, and have you seen downtown Rockford lately?” Lousin asked. “If you don't want to pay for it, you're gonna get nothing. And there's nothing there.”

Others disagree, saying the cap reins in government, even though it covers only a portion of the ways a municipality can borrow.

“It keeps them spending up to what they're allowed to, and if we raised debt limits, a lot of them would take advantage,” said David From, Illinois state director for Americans for Prosperity, a national tax policy reform organization.

Prospect Heights does not have home-rule authority and is at 68 percent of its debt limit. City officials said they had voter approval to raise taxes and borrow for road improvements.

“When it's the kind of debt that's approved by your constituents, that helps,” said Stephanie Hannon, the city's finance director. “The debt limit also helps keep a town's bond rating down. And depending on what kind of board you have, there are some where the (debt) limit would protect taxpayers.”