Moody's blames Chicago downgrade on Illinois pension problems

Moody's
July 18, 2013 3:56:48 PM PDT
Chicago likely will have to pay more to borrow money after Moody's downgraded the city's credit rating and says the outlook for the future is negative. Moody's Investors Service lays the blame squarely on the city's large and growing pension liabilities.

Fixing the state's pension crisis is crucial to repairing Chicago's debt rating. And, Chicago is not alone. Dozens of Illinois cities and towns that are struggling to pay retirees are waiting for state legislators to change the rules governing public pension systems.

"We want to be called back to work, we demand to be called back to work," Rep. Dennis Reboletti, (R) Addison, said.

With Illinois pension debt growing by millions of dollars daily, three suburban lawmakers wondered why they were not in Springfield doing something about it.

"We ought to be down there - even without our salaries - to get the job done," Rep. Ron Sandack, (R) Downers Grove, said.

Last week Governor Pat Quinn suspended lawmaker salaries until they resolve the nearly $100 billion pension shortfall. But the governor did not set a date for a return to the capitol.

"He can call us into session. That, to me, is a lot more impactful than what he did," Sen. Mike Connelly, (R) Naperville, said.

Chicago -- with its own $19 billion unfunded pension debt -- must worry about higher interest rates after city bonds were downgraded again Thursday. Mayor Rahm Emanuel released a statement, "Without comprehensive pension relief from Springfield, municipalities such as Chicago will continue to receive negative reviews from rating agencies."

After a bill-signing Thursday, Governor Pat Quinn would not comment on pensions. But his democratic primary opponent Bill Daley wants the governor to convene a 24-7, as-long-as-it-takes legislative leaders meeting.

"I mean, he's got a big house in Springfield, the mansion. They could all just stay in there and just pound this thing out," gubernatorial candidate William Daley said.

The house-senate conference committee on pensions has given no indication when this summer it might finish writing a compromise reform bill for consideration. Republican leader tom cross says where the work is completed is not important:

"We can do it here, we can do it in Springfield, we can do it on a Metra train. I don't really care. I want to get pension reform done," Rep. Tom Cross, (R) minority leader, said.

Late Thursday afternoon, Illinois Senator Kwame Raoul, who chairs the pension reform committee, said he doesn't expect a compromise proposal until August.

As for Daley's idea to lock up negotiators at the governor's mansion, a Quinn spokeswoman said the governor met numerous times with General Assembly leaders on pensions during the past two years.


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