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https://www.city-journal.org/article/chicago-illinois-governor-jb-pritzker-pension-police-fire

Chicago Is on the Verge of Fiscal Collapse

A new Illinois law has put the Windy City’s already-underfunded pensions on even shakier ground.

Chicago’s finances were already on life support. Now, with a single piece of legislation, the state of Illinois has pushed the city closer to fiscal collapse—and put every American taxpayer at risk of footing the bill.

On August 1, Governor J. B. Pritzker signed a bill that ranks among the most financially reckless in Illinois history. It includes pension “sweeteners” for Chicago police and fire employees hired after 2011. Experts estimate that it creates $11 billion in new liabilities and drops the “funded ratio” of Chicago police and fire pensions to just 18 percent, meaning that they have just 18 cents on hand for every dollar owed. (Actuaries consider funded ratios below 40 percent as being at the point of no return.)

No American city has a worse public pension problem than Chicago. It carries more pension debt than 43 U.S. states and is home to seven of the ten worst-funded local pension systems in the nation. As a result, no other big city burns a larger chunk of its budget (around 40 percent) on debt and pensions every year.

And no U.S. city has a worse credit rating. The new pension sweeteners will more than likely contribute to another credit downgrade for Chicago, dropping the city into junk status and imperiling its ability to invest in schools, safety, and infrastructure.

Making matters even worse is the Illinois constitution’s “pension protection” clause, which effectively makes it impossible to trim pension benefits. Elected officials cannot pass a law changing these new sweeteners—no matter what voters want.

Working Chicagoans will be stuck with the tab for these new benefits long after the politicians responsible have left political life. For context, the city’s successful summer youth jobs program cost $52 million this year. Chicago could eliminate that program entirely and still not have enough to cover the price tag for these new pension benefits, which totals $60 million next year and balloons to $753 million per year by 2055.

Prior to Pritzker’s signature, these sweeteners passed unanimously out of the Illinois General Assembly. They also drew no public opposition from Chicago’s Mayor Brandon Johnson. This makes it clear that Illinois is counting on residents of the 49 other states to fund its pension promises.

Taxpayers got a preview of this plan in 2020. During the Covid-19 pandemic, while most states were requesting hospital supplies and emergency aid, the Illinois Senate president sent a letter to Congress requesting $10 billion for a pension bailout.

With state and local government pension debt in the U.S. topping $1.59 trillion, Chicago and Illinois serve as early warnings for a looming crisis. How policymakers respond will set the tone for the rest of the nation.

What can be done? First, state leaders should change the law to allow municipalities to enter Chapter 9 bankruptcy—something that 24 other states, including California and Texas, already do. The word “bankruptcy” can provoke feelings of fear or helplessness. But done properly, bankruptcy can offer communities a chance at a fresh fiscal start and a brighter future.

Critically, bankruptcy would allow Chicago to adjust pension contracts. Opinions by bankruptcy courts in Stockton, California, and Detroit, Michigan, confirm that federal Bankruptcy Code would take precedence over the Illinois constitution’s pension clause. It would also empower the city to renegotiate other corrupt deals.

But Chapter 9 alone is not enough to put Chicago on a path toward solvency. One reason is that the city has taken to issuing sales-tax bonds, which now eclipse its general-obligation bonds. Those dedicated sales-tax revenues and other securitized revenue streams would continue flowing to bondholders even in bankruptcy. That’s why Illinois should appoint a receiver or emergency manager, create a “Tier 3” retirement plan for all new public employees that provides a traditional, 401(k)-style benefit, and pass a state constitutional amendment allowing for changes to future benefits.

These choices require political courage, but the consequences of inaction become more painful with each passing day. If nothing changes, the grim financial consequences will fall not just on Chicagoans but on every American taxpayer.

Austin Berg is executive director of the Chicago Policy Center and coauthor of The New Chicago Way: Lessons from Other Big Cities.

(http://www.autoadmit.com/thread.php?thread_id=5767439&forum_id=2most#49221465)

Experts estimate that it creates $11 billion in new liabilities and drops the “funded ratio” of Chicago police and fire pensions to just 18 percent, meaning that they have just 18 cents on hand for every dollar owed. (Actuaries consider funded ratios below 40 percent as being at the point of no return.)

(http://www.autoadmit.com/thread.php?thread_id=5767439&forum_id=2most#49221489)

furk boomer pensions, such a god damn scam

(http://www.autoadmit.com/thread.php?thread_id=5767439&forum_id=2most#49221499)

(http://www.autoadmit.com/thread.php?thread_id=5767439&forum_id=2most#49221544)