Moody's sees Chicago pension proposal as positive - New York News

Moody's sees Chicago pension proposal as positive

Posted: Updated:

SPRINGFIELD, Ill. (AP) -- A leading credit rating agency called legislation to overhaul to Chicago's pension funds a "positive development," but said it won't solve all the city's problems -- especially if assumptions for annual investment returns fall short.

The analysis released Monday by Moody's Investor Service had called the original proposal "modestly credit positive" because it would tackle the city's massive and growing underfunded pension liabilities.

"Still, even with reform," the report continues, "pensions will continue to weigh heavily on Chicago's credit quality."

Mayor Rahm Emanuel had announced last week that he had an agreement with two city unions covering 57,000 workers and retirees to cut a $20 billion deficit in the municipal workers' and labor workers' pension funds over 40 years. He said half the cost for the pensions would be covered by a five-year, $750 million increase in property taxes.

Later Monday, however, Illinois House Speaker Michael Madigan added an amendment to the legislation removing a property tax hike that would have accounted for about half the cost of the plan. He did not offer an alternate source of funding the pension reform, though the Chicago City Council can still raise property taxes on its own.

The state General Assembly, though, must approve the plan. While City Council members would be the ones ultimately voting on a property tax increase, some state lawmakers felt that they would have been unfairly shouldering the blame for raising taxes by approving legislation nodding to the changes.

The timing isn't the best, either, coming just a week after Gov. Pat Quinn made property-tax relief a cornerstone of his state budget plan. The governor also wants to make permanent what had been planned to be a temporary increase in the state income tax.

If passed by the Legislature, the pension reform law would also need to survive potential court cases arguing that the changes violate the Illinois Constitution's protection of pension benefits. The constitution states that promised benefits shall not be "diminished or impaired."

The Moody's report says that even with reform, pensions will continue to weigh heavily on the city's financial problems. The agency downgraded the city's credit rating last month.

Follow Us!

Share Your Photos & Video

  • Local NewsLocal NewsMore>>

  • Homeowner interrupting burglary is fatally stabbed

    Homeowner interrupting burglary is fatally stabbed

    Monday, September 1 2014 2:35 PM EDT2014-09-01 18:35:46 GMT
    A 67-year-old homeowner was stabbed to death and his wife injured after they came upon a burglary at their Staten Island home.
    Police in New York City say an intruder stabbed a couple who interrupted a burglary at their home, killing the man and injuring his wife.
  • New MTA bus routes take effect

    New MTA bus routes take effect

    Monday, September 1 2014 1:09 PM EDT2014-09-01 17:09:54 GMT
    MTAMTA
    The MTA has new bus routes throughout the 5 boroughs. 
    The MTA has new bus routes throughout the 5 boroughs. 
  • Suspect, rookie officer both wounded in gunfire

    Suspect, rookie officer both wounded in gunfire

    Sunday, August 31 2014 10:11 PM EDT2014-09-01 02:11:38 GMT
    Authorities say an early morning gunfire exchange on a Brooklyn street has left the suspect hospitalized and a police officer with a graze wound.
    Authorities say an early morning gunfire exchange on a Brooklyn street has left the suspect hospitalized and a police officer with a graze wound.
Powered by WorldNow
Didn't find what you were looking for?
All content © Copyright 2000 - 2014 Fox Television Stations, Inc. and Worldnow. All Rights Reserved.
Privacy Policy | New Terms of Service What's new | Ad Choices