Friday, April 11, 2014

Should Chicago Declare Bankruptcy Soon? Debt As a Percentage of Tax Revenue 683%

Illinois State House Representative Jeanne Ives reports:
Mayor Rahm Emanuel’s partial city pension overhaul passed in the General Assembly on Tuesday. The bill that passed merely scratches at the surface of the problem.

In October 2013, Barron’s shed some light on the severity of Chicago’s pension problem in an article that ranked the 20 most populous cities in the US based on their debt as a percentage of government revenue.

Detroit, currently bankrupt, ranked 12th at 372 percent. Chicago, ranked 20th – last place, at 683 percent. The article exposes that it would require ALL of Chicago’s government revenue for the next seven years to finally pay off the city’s debt and unfunded liabilities for worker pensions and healthcare.

Instead of legislation that recognizes the severity of Chicago’s fiscal condition, we were, yet again, handed a bill by those who helped create the problem, and told it was our only hope. But, the bill hides the true nature of the problem and the proper remedy.

What is hidden from taxpayers is the fact that this pension reform will, at a minimum, create a need for $750 million in additional revenue over the next five years most likely from property tax increases. But analysis of the schedule of needed revenue shows that the plan backloads the funding with a significant increase in revenue required in year 2021, concealing from Chicagoans that they can expect even more tax increases after the first five years. The unfunded liability will not be paid off for another forty years.

What is hidden from taxpayers is the fact that this bill is not true reform and enables a deteriorating retirement system. What is hidden from taxpayers is that they will contribute nearly 3 times more to the public pensions as employees will pay into them.
The great moments of Blue America.