You’ve seen the headlines: S&P downgrades Chicago’s credit rating. The mayor proposes a property tax rate hike. CPS and the mayor’s office clash over responsibility for the municipal workers’ pension payment. City Council approves the use of expiring TIF revenue to fund $1.25 billion in bonds for housing and economic development.

A budget war is raging in Chicago, and our press is all over it. But rarely do we confront the deeper questions that underlie the conflict, here and in every other American city: Are we actually broke, and why? Who controls the cash that flows into and out of our cities? Is social democracy, let alone socialism, even possible at the municipal level–or are we destined to forever beg for scraps of state and federal revenue?

For this installment of the Municipal Finance Book Club, we’ll read David Schleicher's In a Bad State and explore the question of what happens when state and local governments face full-blown crises, defaults or bankruptcies requiring federal intervention (or, at least, a distinct decision not to intervene). Published in 2023, this historical survey ranges from the speculative bank runs of the 1830s and 1840s to the interwoven and simultaneous problems caused by the COVID-19 pandemic. For the first meeting, please read through Chapter 4.