Chicago is said to be the city that works. It has problems but its economy remains strong and diversified. It is no Detroit.
Not yet…
Unfortunately for that narrative, Moody’s last week made an unprecedented cut in the city’s bond rating from Aa3 to A3. “The outlook incorporates the likelihood of continued growth in unfunded liabilities in the city’s four pension plans given currently suppressed contributions from the city,” Moody’s stated.
Chicago can’t expect much help from the state of Illinois, which is grappling with $100 billion in unfunded pension liabilities.
Meanwhile, the amount of unallocated cash on hand has fallen to $33.4 million at the close of 2012, from $167 million the year before, reports the Chicago Sun-Times. Mayor Rahm Emanuel deserves credit for confronting city unions over the pension issue, engaging in cost cutting and making the books more transparent. (Chicago’s budget director blamed the apparent drop in cash reserves on “honest” budgeting.) But the city’s debt load has surged from $9.6 billion a decade ago to $29 billion today.
— JAB
