Fitch Ratings downgraded Chicago’s credit to the lowest investment grade levels after the Illinois Supreme Court shot down Mayor Rahm Emanuel’s plan to cut pension benefits for some city workers last week.
Chicago received a two-step downgrade from Fitch Monday, bringing the city’s credit rating to BBB-, one step above a junk rating. The downgrade was precipitated by last week's decision by the Illinois Supreme Court’s to strike down Emanuel’s pension plan.
“Fitch believes last week's Illinois Supreme Court ruling striking down pension reform legislation for two of the city of Chicago's four pension plans was among the worst of the possible outcomes for the city's credit quality,” a release from the ratings organization said. “Not only did it strike down the pension reform legislation in its entirety, but it made clear that the city bears responsibility to fund the promised pension benefits, even if the pension funds become insolvent.”
The mayor won re-election in 2015, arguing his pension plan was constitutional and would save money.
But Chicago kept drowning in red ink as a result of the city's pensions, necessitating a record $588 million property tax hike approved by the Chicago City Council in October. An additional $170 million property increase to fund teacher pensions is on the horizon.
Chicago has the second-worst credit rating of any major U.S. city. The once-bankrupt Detroit currently has the worst rating.
Source: http://www.nbcchicago.com/blogs/war...os-Credit-Rating-373753491.html#ixzz44JFozJa4
Democrat controlled city...and coming Friday the Chicago teachers union is planning to go on strike.
Chicago received a two-step downgrade from Fitch Monday, bringing the city’s credit rating to BBB-, one step above a junk rating. The downgrade was precipitated by last week's decision by the Illinois Supreme Court’s to strike down Emanuel’s pension plan.
“Fitch believes last week's Illinois Supreme Court ruling striking down pension reform legislation for two of the city of Chicago's four pension plans was among the worst of the possible outcomes for the city's credit quality,” a release from the ratings organization said. “Not only did it strike down the pension reform legislation in its entirety, but it made clear that the city bears responsibility to fund the promised pension benefits, even if the pension funds become insolvent.”
The mayor won re-election in 2015, arguing his pension plan was constitutional and would save money.
But Chicago kept drowning in red ink as a result of the city's pensions, necessitating a record $588 million property tax hike approved by the Chicago City Council in October. An additional $170 million property increase to fund teacher pensions is on the horizon.
Chicago has the second-worst credit rating of any major U.S. city. The once-bankrupt Detroit currently has the worst rating.
Source: http://www.nbcchicago.com/blogs/war...os-Credit-Rating-373753491.html#ixzz44JFozJa4
Democrat controlled city...and coming Friday the Chicago teachers union is planning to go on strike.