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[28 Mar 2016 | No Comment | ]

Chicago’s pension woes took another bite out of the city’s credit rating today as Fitch Ratings downgraded its view of city debt two levels — just one level above junk.

In an email today, the New York financial firm prominently noted last week’s Illinois Supreme Court decision overturning as unconstitutional legislation that would have refinanced city pension funds—covering laborers and white-collar workers—that are more than $8 billion short of the money they will need to pay promised benefits.

The decision “was among the worst of the possible outcomes” for the city, Fitch said in its assessment, since it not only overturned the legislation, but “made clear that the city bears responsibility to fund the promised benefits, even if the pension funds become insolvent.”

Added Fitch: “Since last week’s ruling appears to eliminate the option of reducing the liability, the city will need to rely on its ability to increase revenues and control spending.”

The firm also noted that legislation to allow the city to stretch out payments to its police and fire pension funds, saving it $220 million a year now, has been passed by state lawmakers but not sent to Gov. Bruce Rauner, who has threatened to veto it unless other steps are taken as part of his turnaround agenda.

Fitch lowered its rating on more than $10 billion in city debt from BBB-plus to BBB-negative, with a negative outlook.

“The decision by the Illinois Supreme Court is disappointing, but the city’s ability to pay our debt and meet our current commitment to the pension funds has not changed,” Carole Brown, Chicago’s chief financial officer, said in an e-mailed statement today.

Moody’s Investor’s Service already has city debt at junk levels. A third firm, S&P, has Chicago still at investment grade, but only by one notch.

The downgrade affected $9.8 billion of general-obligation bonds and $486 million of debt backed by sales taxes. The company said the outlook is negative, indicating that the rating could be lowered further.

Bloomberg contributed to this article.

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[28 Mar 2016 | No Comment | ]

Rich Miller wants Bruce Rauner to surrender. This has been a theme of Miller’s since shortly after Rauner was inaugurated.  Yesterday, in a guest column at Reboot Illinois, he used the loss of two high profile Rauner-backed primary candidates to renew his call.  Miller begins with this sentence: It’s almost impossible to make a deal with somebody who won’t accept reality. Let’s talk about reality. Miller is correct that Rauner lost two races where he had made a significant investment….

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[28 Mar 2016 | No Comment | ]

Republicans must be cheering while Democratic jaws are dropping.
Before explaining why, let me pose a  question:
Suppose you run a nonpartisan, social-issue organization. Like most such groups you keep score on how senators and congresspeople vote on your bills.
Let’s say in a forthcoming election, Legislator A gets a score of 100 percent in the most recent session. The opponent, Legislator B gets a respectable 78 percent. in a  previous session B scored a miserable 39 percent.
Whom would you endorse?
Most people would answer “Legislator A, of course.”
Most people, that is, except the …