Yesterday, Chicago got the Obama Presidential Library and thank heavens, since Chicago also lost any semblance of dignity in terms of our bond rating, and we’ll most definitely need the kind of multi-million dollar public works project the Library promises to be in order to survive financially.
After years of teetering on the edge of fully bankrupting the city, Moody’s finally pulled the plug, dropping Chicago’s status two notches to “junk,” in a (probably futile) effort to encourage either pension reform or a tax increase. The move came (at least in part) as a response to an Illinois Supreme Court decision that dropped late last week, declaring that the pension reform package the legislature had concocted was unconstitutional, and wiping it off the books.
Moody’s Investor’s Service on Tuesday dropped Chicago’s bond rating two more notches — to junk status — turning up the heat on Mayor Rahm Emanuel to raise property taxes and on the Illinois General Assembly to approve a Chicago casino.
“It is irresponsible to play politics with Chicago’s financial future by pushing the city to increase taxes on residents without [pension] reform,” Emanuel was quoted as saying in an emailed statement.
The decision to drop the bond rating that determines city borrowing costs — from Baa2 to Ba1 with a negative outlook — comes just days after the state Supreme Court unanimously overturned state pension reforms and placed Emanuel’s plan to save two of four city employee pension funds in similar jeopardy.
The rating applies to $8.1 billion in general-obligation debt, $542 million in outstanding sales tax revenue debt and $268 million in outstanding and authorized motor fuel tax revenue.
I wouldn’t mind the Chicago casino, honestly, if they promised that it would replace whatever is currently passing for a “tourist attraction” on Navy Pier, but of course, with casinos come all sorts of problems that Chicago probably already has. The property tax increase would drive people to the suburbs and has the potential to impact the city’s bottom line as even corporations dump it for cheaper digs elsewhere, so Emanuel is reticent to agree to even a small bump. There’s always the potential for a city income tax, too, on people who earn their money by commuting from their less-taxed neighborhoods, but of course, that would disproportionately impact low-income families who can’t move and must work in areas close to home or accessible via public transportation.
So the only thing Emanuel can do (at least, theoretically) is count on the legislature to enact some type of pension reform. But with unions giving big bucks to the mayor’s opponents and Springfield stocked with Democratic legislators relying on the union dime for their next campaigns, the possibility of anything comprehensive coming out of them is unlikely. So, then there’s SCOTUS, who could take an appeal from the Illinois Supreme Court and potentially overturn them.
Or we could all go bankrupt and live in the Obama Presidential Library.