Chicago suburb Dolton faces vehicle repossessions, murky finances
5 min read
The city of Dolton, Illinois, in south Cook County, shares a boundary with Harvey. It also appears to share a
KS StateBank last month
At
But Henyard, a former village trustee, was not elected mayor until 2021, and her tenure is not the first time Dolton has faced financial trouble.
In 2015, for example, Dolton’s village administrator
The bonds in the city’s 2016 default were insured, and the city reported in 2017 that
S&P Global Ratings withdrew its underlying rating of Dolton in 2015, after downgrading it to junk BB from investment grade A-minus in 2013, citing low liquidity and expected general fund drawdowns.
Dolton has also been losing population, going from 23,153 residents in 2010 to 21,426 residents in 2020 to 20,621 residents in 2022,
“They are just gradually bleeding out, and that’s not great for their municipal finances,” said Marc Joffe, a former Moody’s Analytics analyst and current state policy analyst at the Cato Institute, a libertarian think tank based in Washington, D.C. “That [population loss] generally is a very negative sign for municipal financial health… It may mean that property values are going down because there’s less demand for homes.”
In Dolton’s
Dolton’s liabilities fell to $113.85 million from $123 million. Its long-term debt also fell by roughly $21 million between 2020 and 2021. However, it was still $46.76 million in the red.
“They probably still were getting American Rescue Plan Act money into 2022,” Joffe said of Dolton’s ensuing financial position, noting that ARPA funds have tapered off since then.
He stressed that a negative general fund balance is one key red flag for municipalities. Dolton ended fiscal year 2021 in the black with a general fund balance of $4.12 million. So it has been faring better in recent years than in 2015.
According
Dolton had about $10.7 million of outstanding bond debt as of April 30, the reports said.
In another
The warrants, placed with the Flagstar Public Funding Corp., carry a tax-exempt annualized interest rate of 6.5%.
As for 2024’s financial position, Trustee Kiana Belcher said village officials, “at the direction of the mayor,” have not shared the village’s books with trustees lately. But she told The Bond Buyer that last they heard, which was in September, Dolton was about $7 million in debt.
“Taxes have come in, which would be about $2 million,” she said. “So [it’s now an] estimated $5 million, without concrete evidence, because no financial reports have been given.”
Dolton is one of a handful of struggling Illinois towns to skip filing official audited annual financial statements in recent years — another “red flag” for municipalities, Joffe said. Some of the other towns delinquent on their financial statements are arguably in worse shape than Dolton.
Illinois did not ultimately change its rules to let municipalities file for Chapter 9, and some Illinois cities that tried have failed. Washington Park filed in 2004, but the filing was dismissed. It filed again in 2009, pointing to overwhelming debts; the filing was dismissed in 2010, on the grounds that Chapter 9 bankruptcies are not authorized under Illinois law.
Brooklyn, Illinois also filed for Chapter 9 bankruptcy in 2003 and
East St. Louis never actually filed, but was placed under supervision by the Financial Advisory Authority.
“I believe there needs to be a more robust regime of state intervention,” Joffe said, pointing to states
Without a change in Illinois law, Dolton might face an uphill struggle to declare bankruptcy — that is, if such a step were needed. In the absence of transparency around its current financial straits, the best policy solutions are a matter of speculation.
“I feel badly for stakeholders in Dolton, because everyone deserves to live in a well-run community,” Joffe said. “And the evidence now is that residents of Dolton are not living in a well-run community, and there are going to be consequences for that.”
Dolton’s median household income in 2022 was $54,748,
The residents of Dolton voted in a 2022 referendum to recall Mayor Henyard, according to
