Free Republic

East St. Louis is short $9.5 million between a budget deficit and back payments owed to its fire and police pensions. As a result, city leaders are closing a firehouse and laying off nine firefighters. Nine firefighters have been asked to hand in their gear and their fire station will temporarily close as East St. Louis, Illinois, faces a $5.5 million budget deficit and interception of nearly $4 million in state funding for debts owed to its police and fire pensions. Unfortunately, with 100% of the City’s state revenues being redirected to the police and fire pensions, we are faced...

When Chicago issued half a billion dollars in new bonds late last year, some investors balked, though the offering was designed to protect them by guaranteeing that they would be paid with tax revenues that Illinois sends to its biggest city. “It’s an untested model,” the research head at Gurtin, a municipal bond firm, said of the offering—Chicago’s first under a new state law. Ominously, he worried that if Chicago defaults, it was unclear how much protection holders of the new debt would really get. Even as Chicago grapples with nightmarish violent crime, the city faces imposing fiscal challenges. The...

As you may have heard, Illinois has a pension problem. Now, that’s not Illinois’ only problem, of course. Illinois also has a crime problem, an education problem, a quality-of-life problem, a transportation problem, a public corruption problem, an unemployment problem, and a population shrinkage problem. Frankly, there isn’t enough room in this column to list all of Illinois’ problem, but that’s a start. The Chicago Fed – that’s the Chicago branch of the Federal Reserve System – has proposed an idea for dealing with a part of Illinois’ pension problem. Since the problem is that many state and local government...

Harvey. Illinois is in the midst of a financial crisis that represents the tip of the iceberg ... The city of 25,000 in the far northwest suburbs of Chicago is suffering from high unemployment (22%). An astonishing 32% of the population lives below the poverty level. This is a deadly mixture that has caused catastrophic shortfalls in revenue, leading to a crisis in funding pensions for the city's retired workers. Since state law prohibits municipal bankruptcy, Harvey has been forced into a situation Illinois has never seen. In February, the state began to garnish Harvey's revenue to fund its pension...

Chicago has a simple financial choice: Stay in frying pan or get in the fire. That in simple terms is what Moody's Investors Service said in a report today about the difficult options the Emanuel administration faces over the city's woefully underfunded pension funds. The city must cut spending and raise taxes now or the risks of becoming insolvent will grow, forcing even harsher decisions later. The credit rating agency offers a sobering reminder of what's at stake in the eight-page report, which focuses on the pensions problems. ... A CUT ABOVE JUNK. Moody's, typically the most conservative of the...

The Chicago Public Schools — already facing a federal criminal investigation of its CEO and a projected $1.1 billion budget deficit next school year — now must pay a price for those problems through higher interest rates on a new $300 million bond deal. The rates lured investors to buy the bonds, which CPS says it will use to pay off recently completed construction projects. But they also mean Chicago taxpayers will pay more over the life of the borrowing deal, financial analysts said Wednesday. The main bond issue — for $280 million to be repaid over 25 years —...

Moody’s Investors Service on Friday announced it had reduced its rating on Chicago Board of Education debt to one level above junk bond status. Moody’s downgraded the rating to Baa3 from Baa1 on the board’s general obligation debt. That rating applies to a total of $6.3 billion in outstanding debt held by Chicago Public Schools. That lowered rating, according to Moody’s, “reflects CPS’s continued reliance” on its reserves to cover ongoing operating expenditures, “particularly pension contributions, which will steadily increase in the coming years.” ... the lowered CPS rating also takes into account the city’s own credit rating, which also...

Pension crisis I do not think that any elected officials have a viable solution to the pension deficit issue which will continue to grow. As I said before there is no simple solution. This is an issue that affects every level of government (City, County, State, Federal, Etc.). No one solution or one individual can solve this problem. It would take a committee with multitude of financial planners and an open mind to modify the plan as it progresses, when some facets of the plan do not work as anticipated. But as the crisis grows, we as people of this...

A judge said this week he is likely to drop five of eight former city and pension officials from a lawsuit San Diego City Attorney Michael Aguirre filed in an effort to roll back pension benefits he contends the retirement board illegally approved. Superior Court Judge Steven R. Denton issued a tentative ruling Thursday removing the five officials from a lawsuit Aguirre filed in July. The lawsuit accuses the eight officials of violating the state's Political Reform Act and contends they had conflicts of interest that should invalidate their role in crafting or approving pension benefit increases in 1996 and...