By: Mark Glennon*
Much of the local coverage of Chicago’s problems is focused on how the city will pay a $600 million contribution to its pensions scheduled for next year. But on Wednesday, S&P laid out the numbers showing why it doesn’t mean much. To properly fund the pensions, the city would need to be paying $
1.9 1.8 billion per year. That $600 million is a nearly arbitrary number set earlier by Springfield.
The Bond Buyer, a major national financial, immediately saw the importance of S&P’s warning and wrote about it immediately, as did we, here.
And Chicago’s media? Nothing. Not a word.
Bigger news came Friday with Moody’s downgrade of Illinois debt, but that’s no excuse for ignoring S&P’s warning from two days earlier. Plenty of holders of Chicago bonds who will be hit by that downgrade no doubt would like to have read about S&P’s earlier warning.
No wonder Chicago voters are attracted to a populist demagogue, Chuy Garcia, who is promising the moon while holding property taxes flat. It’s all just another lesson about why Illinois voters, especially Chicagoans, are in fiscal fairyland. The press simply doesn’t see what’s important on budget issues, doesn’t understand pensions, and hasn’t educated Chicagoans about how bad things are.
Mark Glennon is founder of WirePoints