Here's Moody's latest sobering take on Chicago's pension crisis

Crain's Chicago Business reports:

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.

“In our opinion, the pursuit of bankruptcy is not on the near-term horizon for Chicago,” the report says. “If Chicago's pension funds continue toward insolvency, however, our opinion may change.”

Other experts also have ruled out the likelihood that the city will seek a financial reorganization, but the continued speculation underscores Chicago's dire financial condition.

Moody's focuses on two scenarios facing the city of Chicago, but it does not address two efforts by Mayor Rahm Emanuel that, if successful, could soften the financial pain for taxpayers. Emanuel has proposed a city-owned casino that could generate as much as $100 million a year to fund municipal pensions.

Also potentially easing the blow would be a deal to restructure Chicago's police and fire retirement plans, which would require approval by the Illinois General Assembly and could include cities statewide. A spokeswoman for the mayor did not immediately have a comment on the report.

A Blue America update.