Earlier this week we wrote that Gov. J.B. Pritzker is digging Chicago’ financial hole deeper. A new law he signed increases pension benefits for Chicago firefighters by raising the cost of living adjustments for some of its members. In all, the new law will increase the city’s liabilities by $850 million. Read the details here.
Anybody who’s been following Chicago knows the last thing the city needs is more debt. Chicagoans are being swamped by pension debts, already the biggest per-capita burden of any major city in the country. By signing the new legislation into law, Pritzker has shoved more debt onto ordinary Chicagoans.
Not surprisingly, Moody’s has called the action “credit negative…because it will cause the city’s reported unfunded pension liabilities, and thus its annual contribution requirements, to rise.”
Moody’s added:
Pensions are the largest credit challenge facing Chicago. We calculate Chicago’s adjusted net pension liability (ANPL) to be $46.6 billion for FY 2019, which is highest relative to its revenue among all large local governments. Chicago also has numerous overlapping municipalities such as its school and park districts, which share the same tax base and add additional leverage to Chicago through their own substantial unfunded pension liabilities.
Two important facts to note about the city’s pension shortfalls. First, Chicago officially says its four city-run pension funds – police, fire, municipal and laborers – are short by some $31 billion. But Moody’s puts the number at nearly $47 billion using more realistic, market-based assumptions.
Second, those debt numbers don’t include the Chicago Public Schools. When you add its $23 billion (Moody’s, 2018) pension shortfall, the total burden on Chicagoans for Chicago-only debts jumps to $70 billion. Divvy that between Chicago’s 1.04 million households and you’re talking about $67,000 in debt each. And that number far underestimates the real household burden considering nearly 20 percent of the city’s population don’t have the means to contribute a dime to that pension shortfall.
Chicago’s fiscal position is under deep stress, though the upcoming billions in stimulus funds will paper over the cracks for a year or two. But in a major warning to city officials, Moody’s said “The city must continue to increase its contributions substantially to prevent the insolvency of its deeply underfunded retirement systems…”
The bad news for Chicagoans is that more debt is being piled up on them by the governor and the legislature. And that means taxes will continue to go up. The good news is, some groups outside of Illinois are keeping tabs. At some point, that may make a difference.
Read more about Chicago’s financial crisis:
- Pritzker digs Chicago financial hole deeper by increasing city firefighter pensions
- Nine facts Chicago’s City Council ignored when passing the city’s 2021 budget
- Appease the Chicago Teachers Union and this is what you get
- “Wealthy” Chicago households on the hook for up to $2 million in debt each under progressive approach to pension crisis
Expect no retraction or apology. This what they do.
The state’s existing buyout program for its own pensions is the precedent for Chicago, which should be a warning: Look out for similar exaggerated claims and shoddy analysis.
Don’t expect Moody’s to ever downgrade Chicago or Illinois to Junk unless the city or state actually default or are ready to. Moody’s has Never, and I mean Never, protected investors. They don’t want to be blamed for the trigger. Sure, they’ll pick on some small muni to make an example of from time to ttime.
With all Pritzkers $billions$ he doesn’t need the public sec union’s campaign donations to run his reelection and there’s no Republican challenger even on the radar, the big mystery is why is he so beholden to the public sector unions? What does the machine have on jb that he’s so afraid of?
Also on this week’s Fox Flannery Fired up Flannerys say chicago has an 80% yearly reduction in fires since the 60’s but still has same #of firefighter and firehouses as back in 60s..ASTOUNDING!! State rep detmer is good also. Flannery Fired Up: April 9, 2021
fox32chicago.com/video/920419
Tick tock only a matter of when not if the pension system blows up…and soon is my bet.
Everybody already seems to know this except the Democrats running the state of Illinois. Wow. How clueless can they be? Or maybe not as long as they get theirs it’s okay.
The IMF created an “asset” called an SDR. Biden is funding it. Look it up- the USA is printing money to support this. Bailing out the firemen is nothing compared to what is happening to America. We are all threatened by global “Reset”.
https://youtu.be/67hNp-vsFew
Moody has no credibility. They will say these things, but watch, they wont move anything to junk. Because that would disqualify the institutions who pay them from investing and getting incredible (and safe) returns on taxpayer misery. Its time to class action sue Moodys.
I’d be curious what does Moody’s have to say about your comment? Would really like to hear their answer.
Claiming $67,000 in debt means nothing to the average person. Look at New York City with their personal income tax, people justify increase cost.
If you want to enact change, estimate the year pensions are insolvent. What year will Chicago start missing payments?
I’ll assume 7% payout with Chicago Firemen Pension providing 5% in new money. The return has been terrible and the cost increasing, so we are looking at 9 years to insolvency maximum.
The only way Illinois Changes is if the Unions want a change.
Biden and the Leftists Democrats just spent federal taxpayer $$$ (borrowed from future generations of course, or worse devalue our fiat reserve (for now) currency) to bailout private union pensions (no reform either!). That’s the game plan-bailouts. So don’t worry, be happy! It’s Leftists Democrat Keynesian bliss! If you’re not part of the mirage called government union pensions, well it sucks to be you!
I’m afraid the unions in Illinois won’t change until they confiscate every dime the taxpayers of Illinois have. They will keep this up until we can no longer pay for it.
Not one politician on both sides in Springfield give a damn there’s a place for all of you in you know where.
the ONLY solution is leaving IL. Get out and leave something to your kids.
You’re going to have to leave the United States (no I’m not being sarcastic or joking). The taxes being proposed (and will eventually get passed through), the debt/devaluation of the dollar means there is no escape in the USA. This is why obedience through loyalty/patriotism by the people is so very important to the government. People worship it with near religious holy symbols like flags, flying chickens (bald eagles) and religious hymns– oops, I mean national anthems. The people are so propagandized, so brainwashed and so sheep like, they can’t even see that the principles, liberties and freedoms either have/are… Read more »
Doug, I think you are correct and I’m in the process of applying for a European passport — maybe I should consider New Zealand! IF you have any portable wealth, how would you invest it? Are some assets safer in a world-wide depression with accompanying disruption? Take gold, for example. Can one assure that someone will accept my gold coin as authentic? Who will trust whom in the world that evolves? If I become a self-sufficient hermit, who will protect the harvest in my barn? And what treasures and pleasures will remain for me to buy? I find it very… Read more »
Fred- I can’t say. I’m less than half your age, had my close grandmother die on me a few years ago (I took care of her hospice), had my Father die immediately after her from years of fighting prostate cancer, my widowed Mother I care for from a drunk driver near crippling her in an accident (and I’m TERRIFIED of her getting covid), my uncle just died a few months ago of a heart attack and finally my brother has betrayed/refused to pay his share of a 80K loan we took out for him. Point is, I’m suffering from anxiety/depression… Read more »
Remember to also include Chicago Park District.
Question for public employee union members:
Do you ever wonder if maybe you are being manipulated for the benefit of a political class that has no intention of actually paying off these promises?
If Pensions Paid First is any example (who posts here), the answer is clearly “no”. The answer for this person is to “do the right thing” and increase taxes on one of the most taxed populations in the nation and in a state suffering the most out migration. Doing the right thing has consequences. Who could guess?
The inmates are running the asylum. Why would the people collecting a pension do anything to lower the pensions that are collected? Those people can’t fix it can’t change it can’t make it any lower can’t do away with it because it will affect them personally and they will not allow that to happen. They like collecting their big pension checks now or in the future. Isn’t Edgar earning 3 pensions here in Illinois and ? Why would he want to be involved in doing anything to stop that? How many other people are just like him?
Change will be forced on them and it will be soon and swift when the corrupt system collapses.