Economics Today 18th Edition by Roger LeRoy Miller

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A Billboard Firm Grows by Helping Chicago Pay Its Bills
Jean-François Decaux's firm, JCDecaux, has become the world's top outdoor advertising company. The firm owns billboards and ad furnishings at bus shelters and other publicly visible locations in more than 1,800 cities around the globe, but the company has few operations in the United States.
Decaux has determined that his firm must "create a new way in." Decaux's approach is to take advantage of difficulties that the city of Chicago is experiencing in raising sufficient funds to cover government expenditures. Chicago's spending has been outpacing its revenues for a number of years. Today, one component of spending is rising rapidly: the city's payments to retired workers. Chicago's pension payments are now nearly $500 million per year, or about 14 percent of the city's expenditures. BY ₂016, these pension payments are likely to more than double. Hence, the city is searching for user charges to help provide a stable source of funding to supplement tax revenues. Decaux has offered the city a deal. If Chicago allows his company to erect dozens of massive digital billboards on city-owned properties, his company will pay the city user charges amounting to 40 percent of JCDecaux's annual ad revenues. Decaux estimates that the company's payments to Chicago will add up to about $280 million per year-enough to cover roughlY ₂5 percent of the city's required pension payments. Chicago agrees, and Decaux's company rushes to construct its bright digital billboards.
Why is Chicago borrowing hundreds of millions of dollars each year?