Before analyzing the condition of Chicago in the aftermath of the Great Recession, as it is being called, fist we should look at the condition of Chicago prior to the recession. To put things in perspective according to University of Illinois Chicago’s Rebecca Hendrick; the recession started in December of 2007 and comes to an end in June of 2009. She works in the department of public administration and with a few of her colleagues put together an interesting study. Stated in the research she says the following:

"…the Great Recession is not solely responsible for the city’s current budget deficits or its’ long term financial problems. Fiscal policies and practices that existed prior to the recession have contributed greatly to its current financial condition. One such policy is the budgeting of operating deficits and draw-down of its fund balances from 1998 to 2008 which created a significant structural imbalance even prior to the recession. Another is its practice of permitting an accumulation of unfunded pension obligations by making annual pension contributions based upon the statutory formula instead of an actuarially determined contribution. A third fiscal policy is the dedication of property taxes, a more stable revenue source than others, entirely to pensions and debt service. As a result, its general operations are now funded by relatively volatile revenue sources that are sensitive to changes in the economy. However, the revenue structure is also more diversified than what likely exists in other cities" (Hendrick, 2010).

References:

Hendrick, R. L.-T. (2010). The Great Recession's Impact on the City of Chicago. 7-9: October.