Glenwood Mayor Kerry Durkin knows the dangers of gambling with taxpayer money: A reminder looms just across a bank of trees from Village Hall.

Taxpayers in the south suburb have long had to subsidize a golf course that officials bought more than a decade ago. And to try to lessen the losses, the town recently doubled down, borrowing big again to build a new clubhouse.

That borrowing — coupled with plummeting property values — pushed Glenwood into a growing list of Chicago-area cities and villages with debt levels once barred by state laws meant to safeguard taxpayers.

Though much public attention has focused on soaring state and national debt, the increase in local IOUs has sparked worries that the next generation in some communities will face crushing tax hikes.

"It will drive the cost of living up and drive the cost of business up," said Grayslake Mayor Rhett Taylor, whose north suburb is debt free. "If we start having businesses pull out and move to Wisconsin and other states, simply because costs are too high, that will have a ripple effect."

As some officials suggest tightening the rules on town borrowing, a Tribune analysis found that by the end of last year, at least 52 towns in the Chicago area exceeded a limit that was in place until 1970: Taxpayer-backed debt couldn't be more than 5 percent of a community's property tax base.

Those towns helped raise the level of taxpayer-backed debt for all Chicago-area municipalities to more than 5 percent. The findings follow previous Tribune investigations that revealed Illinois' hands-off approach to local borrowing allowed some places to go deep into debt in money-losing ventures.

Durkin defended Glenwood's latest project as financially smart and popular. But he's uneasy that his small town's debt rate is now more than double the pre-1970 limit.

"I'm probably the only person in this town that loses sleep on this, but I do," he said.

More loans

In an unprecedented look at municipal debt, the Tribune collected data on 270 communities in Cook, DuPage, Kane, Lake, McHenry and Will counties for 2010 and 2011 — the most recent, widely available figures.

It focused on so-called general obligation bonds — the kind of big loans that municipalities promise to pay back even if it means hiking taxes. To compute debt levels for each, a common industry standard was used: The amount owed by each city or village was divided by its equalized assessed property value.

Some cities and villages' rates rose simply because their tax bases shrank, such as Stone Park.

The near west suburb's property values sunk by a fourth. Stone Park had previously borrowed to buy land, upgrade streets and even pay typical bills. The village's debt load is now more than 20 percent. 

And some municipalities' rates rose because they borrowed more as their tax bases sunk, such as Evanston.

Records show the city slightly boosted borrowing to cover an early retirement program and infrastructure improvements, including park and street upgrades. That helped send Evanston's debt rate, by 2011, to just above the state's old limit.

Others borrowed at a bolder pace, such as Carpentersville. The far northwest suburb nearly doubled its outstanding general-obligation bonds to build a new public works facility and make street improvements, its finance director said. The village's debt level topped 7 percent.

Those municipalities can trace their ability to borrow heavily to the 1970 rewrite of the Illinois Constitution, which lifted the 5-percent borrowing cap. In its place, the constitution created a class of municipalities called "home rule" that, among other things, can borrow and tax with few limits and no requirement to first seek voter approval. About two-thirds of Chicagoland residents live in such communities.

For the rest of municipalities, taxpayer-backed loans are capped at nearly 9 percent.