Chicago suburb Dolton gets grim financial report from Chicago’s ex-mayor
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The village of Dolton, a southern suburb of Chicago, has been ratcheting up unfunded expenditures since 2021, resulting in a negative $3.65 million balance in its general fund as of May.
The village has
Charles River Associates — the consulting firm Lightfoot, also a former federal prosecutor, joined in March — is conducting an investigation into misuse of public funds in Dolton at the behest of village trustees.
“This has been a challenging investigation, to say the least, because we have not received the level of cooperation from the mayor that I had hoped,” Lightfoot said during her appearance Thursday. “I think there are going to have to be some tough decisions that are made. But you have to make [them] with as complete a set of information as possible.”
Lightfoot stressed that the findings she was presenting were preliminary and the investigation is ongoing. But she said CRA expects to finish “in an expedited fashion.”
Over the last three fiscal years, the average monthly expenditures of the village have increased by nearly 30% while revenues have stayed basically flat. The village’s general fund has dropped precipitously since April 2022, when it had a $5.6 million balance.
“Having a negative general fund balance is a sign of severe fiscal distress,” 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. “Indeed, [the Government Finance Officers Association] not only recommends a positive unrestricted general fund balance, but one that is equal to two months of expenditures. Clearly, Dolton is nowhere near that level.”
The unrestricted cash balance of Dolton’s general fund has dropped from almost $5 million as of April 2022 to negative $5.5 million as of May, CRA found. The village has about 20,000 residents.
Nearly every month, a portion of checks are held by the village due to unavailability of funds, Lightfoot said. As of June 18, there were 589 checks totaling over $6 million that had been held back, she said.
“That is a big driver of the deficit in the general fund,” she added, noting that there are also invoices that have not been entered into the system yet and recommending that the village invest in an automated invoice system rather than its current manual system.
The village has 22 bank accounts not including pension assets, with most monthly operating costs paid from one account. As of June 30, that account has a balance of $715,000.
Village of Dolton
The village in late 2023 sold a $2.9 million general obligation tax anticipation warrant to Flagstar Public Funding Corp.,
The final maturity of the warrant was scheduled in May — nothing has been posted to EMMA since the November notice about the warrant.
The village had $10.7 million of GOs outstanding as of April 2022, the most recent data it has posted on EMMA. Those 2009 bonds are wrapped by Assured Guaranty, according to their official statement.
S&P Global Ratings withdrew its underlying rating of Dolton in 2015, after downgrading it to BB from A-minus in 2013, citing low liquidity and expected general fund drawdowns.
Illinois municipalities don’t have
“Illinois state government would have to approve a Chapter 9 filing, but between Lightfoot’s findings and the fact that Dolton is being ordered to begin making payments on a $33.5 million judgment in a case of police misconduct, I don’t see how the village can avoid it,” Joffe said.
CRA also found that the village had used six different credit cards from January 2021 through this May, with receipts for purchases “rarely provided,” Lightfoot said.
The credit card spending was not presented to the board for approval, she said. It included $40,000 in purchases on Amazon — the village does not have an Amazon account, so an individual appears to have added a village credit card to their Amazon account — and cross-country trips for between one and 10 people.
The trips were to New York City; Washington, D.C.; central and southern Illinois; Atlanta; Montgomery, Alabama; Jackson, Mississippi; Austin; Las Vegas; and Portland, Oregon.
