Part 2: Chicago Pension Crisis

Chicago: My kind of town

By: Laura Day DelCotto, Esq.

Last month I blogged about Moody’s downgrade of Chicago’s debt to “junk status,” and the city’s drama with the Chicago Teacher’s Union.

UPDATE: Mayor Rahm Emanuel has found a way to “fix” Chicago’s $30 billion unfunded pension for public workers and teachers.[1] In 2015, the City has its balloon payment coming due on its previously issued  pension bonds, yet its bond rating was recently moved to “ junk” status, making it a bit of a challenge to refinance.   So—how can Chicago fund the $1.1 billion balloon, which is a third of its total annual budget?

Frank Sinatra would be proud. Gambling will save the day.  A brand new shiny object.  A “win- win” proposal with glossy drawings and renderings.   A new casino, owned by the City, whose profits will go solely to fund the pension. Problem is, the middle-market has been so saturated with casinos that revenue declines are now being reported as the competition increases all across the mid-west and east coast. Take a look at Atlantic City lately?

State legislators have introduced a bill supportive of Mayor Emanuel’s plan.

Kentucky, keep watching Chicago.  It sounds all too familiar.

[1] Wall Street Journal, “Rahm Emanuel Rolls the Dice to Pay Chicago’s Pension Bills,”  6/6/15.

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