The village of Dolton, located in the southern suburbs of Chicago, has been facing a serious fiscal crisis since 2021. The general fund of the village is in a negative balance of $3.65 million as of May, a clear indicator of financial mismanagement. The lack of audited financial reports since fiscal year 2021 and the absence of a city treasurer raise serious concerns about the transparency and accountability of the village’s financial operations. These issues, coupled with a vacant finance director role, present a troubling trend of unfunded expenditures that have plagued Dolton in recent years.
Questionable Spending Practices and Overtime Increases
Under the administration of Mayor Tiffany Henyard, who assumed office in 2021, general administration department expenditures have surged by 47% since fiscal 2022. Similarly, police department expenditures have risen by 21% during the same period, primarily driven by significant overtime increases. These alarming figures point to a lack of financial discipline and oversight within the village government, leading to unsustainable growth in expenditures without a corresponding increase in revenues.
Former Chicago Mayor Lori Lightfoot, now part of Charles River Associates, is conducting an investigation into the possible misuse of public funds in Dolton at the request of village trustees. Despite facing challenges in receiving cooperation from Mayor Henyard, Lightfoot emphasized the need for tough decisions to be made based on complete information. The preliminary findings of the investigation reveal a disturbing pattern of financial mismanagement and potential misuse of taxpayer dollars within the village.
The financial health of Dolton has deteriorated significantly over the past three fiscal years, with average monthly expenditures increasing by nearly 30% while revenues remain stagnant. The general fund balance has plummeted since April 2022, when it stood at $5.6 million, to a negative $5.5 million as of May. According to financial experts, such as Marc Joffe from the Cato Institute, a negative general fund balance is a clear indicator of severe fiscal distress. The current financial status of Dolton falls far below the recommended standards set by the Government Finance Officers Association, highlighting the urgent need for corrective action.
The unrestricted cash balance of Dolton’s general fund has dwindled from nearly $5 million in April 2022 to a negative $5.5 million in May. With approximately 20,000 residents, the village faces significant challenges in meeting its financial obligations, as evidenced by the holding back of checks totaling over $6 million due to a lack of available funds. The manual invoicing system in place has proven to be inefficient, leading to delays in processing invoices and contributing to the growing deficit in the general fund. Implementing an automated invoice system is recommended to streamline financial operations and improve cash flow management.
The financial instability facing Dolton raises concerns about the village’s ability to meet its debt obligations and maintain essential services for residents. The sale of a $2.9 million general obligation tax anticipation warrant in late 2023 highlights the village’s reliance on external financing to cover its outstanding debt. With a history of credit rating downgrades and liquidity challenges, Dolton may be at risk of facing bankruptcy if significant changes are not implemented promptly. Recommendations for enhancing financial transparency and accountability, such as limiting credit card usage and improving approval processes for expenditures, are essential to safeguarding the long-term financial viability of the village.
The fiscal crisis in Dolton underscores the urgent need for comprehensive financial reforms and strategic decision-making to address the village’s financial challenges. By prioritizing transparency, accountability, and prudent financial management, Dolton can overcome its current fiscal distress and pave the way for a sustainable and prosperous future for its residents.