Chickens…roost…you know the drill.
Chicago is poised to issue more than $2.7 billion of debt amid warnings that its core credit ratings could be downgraded depending on the outcome of the city’s fiscal 2016 budget.
Both Standard & Poor’s and Fitch Ratings said this week they could downgrade Chicago’s BBB-plus general obligation ratings if the city does not adequately address escalating pension payments.
“If the final budget that is adopted by the end of the calendar year fails to cover the larger pension payments with an identifiable and reliable revenue source, it would likely strain the rating, potentially resulting in the rating being lowered by multiple notches,” S&P said in a report.
Fitch Ratings said Chicago risks a downgrade if it fails to put pension payments on a solid funding path or raids budget reserves. Moody’s Investors Service, which dropped Chicago’s rating to junk in May, withheld comment until a final budget is enacted.
Crazy credit ratings people, of course Super Lib Hizzoner Emanuel has an identifiable revenue source:
Mayor Rahm Emanuel proposed a budget on Tuesday that includes the biggest-ever city property tax hike to cover increased contributions to public safety worker pensions.
In every liberal city or state that’s facing ongoing financial problems there aren’t a variety of factors at play, it’s always the pension obligations for the public employee unions. Many of these are legally mandated which leaves lawmakers no option but to keep raising taxes. That drives people away, shrinking the tax base. That leaves fewer people to pay more taxes (WELCOME TO CALIFORNIA!).
Sounds fun, no?
At times I feel like becoming a single-issue voter on pension reform, at least until that problem is fixed.
If only the Republicans had a presidential candidate with a history of successfully battling public employee unions over pension reform…