Comment: Credit rating agencies love, love, love taxes, and couldn’t care less about the long term. They are paid by the bond issuers and suck up to get hired for the next deal. They’ve missed or been late to every major financial crisis in modern times.

Welcome to the city and state of Illinois that haven’t reformed pensions. Government unions refuse to compromise, arguing that higher taxes on the rich can pay the bill. But there aren’t enough rich to soak, so now Mr. Emanuel is whacking middle-class homeowners. Chicago still has $33 billion in unfunded commitments for pensions and retiree health care, so without reform he’ll have to keep whackin.

What’s most striking about Emanuel’s budget is that, despite the city’s terrible finances, it would raise spending (by $170 million, to $7.8 billion), and it would even raise the headcount (by 311 full-time equivalents, to 34,328).

The budget was notable for a few things, including proposals for massive tax increases – and a year after the Mayor claimed that “For the fourth year in a row, we will balance the budget without raising property, sales, or gas taxes.” Has Chicago really balanced its budget for four years in a row, before this year?  In the last four years, the city has outspent its revenue, fees and grants by an average of roughly $1 billion each year.  And the city’s debt has climbed dramatically, even amidst a general economic recovery.

A notable example is the divergent ratings on the City of Chicago, IL sales tax bonds, which carry ratings ranging from ‘AAA’ to below investment grade. Bondholders should insist on a reasonable legal basis to separate ratings of DT bonds such as the Chicago sales tax bonds from the city’s GO rating. Fitch notes that there is none in this case.