By John Ruberry
I’ve been saying that Chicago will be the next Detroit for years, and on Thursday, syndicated talk radio show host–and former Tea Party congressman–Joe Walsh, was making the same prediction on his program.
Walsh was discussing a just-released pension study which the Chicago Sun-Times reported on.
Standard & Poor’s surveyed pension obligations in New York, Los Angeles, Chicago, Philadelphia, San Francisco, San Diego, San Jose, San Antonio, Phoenix, Jacksonville, Dallas, Houston, Columbus, Indianapolis and Austin.
Chicago performed the worst across the board — registering the highest annual debt, pension post-employment benefits costs as a percentage of governmental expenditures and the highest debt and pension liability per capita.
And there is more:
The report noted that the “median weighted pension funded ratio of 70 percent” for the 15 cities “underlies a wide range of positions with Chicago only 23 percent funded across all plans and Indianapolis the most well-funded at 98 percent.”
Chicago’s pension burden is $12,400 per person–more than double that of New York City and it has the lowest bond rating of those 15 surveyed cities. The S&P report says that in 2015 Chicago “only made 52 percent of its annual legally required pension contribution.”
If you are looking for more bad news you came to the right place. More than five times as many people live in New York and Los Angeles combined–but there were more murders in Chicago last year than the total in both of those cities. As for Chicago’s population, it’s at a 100-year-low. Leading the exodus are middle class blacks.
Chicago’s jobs program for people with education degrees, better known as Chicago Public Schools, has been cited by other middle class ex-Chicagoans, including your humble blogger, for decades as the main reason they abandoned the city. CPS bonds are rated as junk. Lack of money may lead to the last thirteen days of the school year being cancelled–and the CTU may add a fourteenth with a one-day strike in May to protest that early shutdown. Yep, I don’t get it either.
CPS officials have been battling the union for years to force teachers to pay more into their own pension funds. Yeah, they can afford it–of teachers in the largest school districts, CPS teachers rank in the top three in pay. But hey, the union members probably are thinking, “Why should we pay more when we have so many taxpayers who can foot the bill?”
But that’s the mindset that got Chicago into its mess. Oh that, and public-sector unions contributing heavily into the campaign funds of Democratic politicians.
Critics of my Chicago-is-the-next-Detroit hypothesis point out that large corporations have been moving their corporate headquarters into Chicago of late, the most prominent examples are ConAgra relocating its HQ from Omaha to Chicago and McDonald’s, which will move back to the city after four decades in suburbia. But no one can say how many of these corporate big shots will live in Chicago.
Two years ago Chicagoans were slugged with the largest property tax increase in the city’s history to pay for, yes, unfunded pension liabilities. Last year Chicago water and sewer taxes were hiked. Remember what what I wrote earlier, Chicago’s pensions are only 23-percent funded. Does anyone think that there aren’t additional massive tax increases in Chicago’s future? And when the producing segment of Chicago is even more depleted–chased out, that is–how will Chicago pay for street repair, schools, and snow removal–as well as adequate police and fire protection?
The Illinois Supreme Court recently ruled that public-worker pensions cannot be reduced.
Here’s what I base my Chicago dystopia projection on. Defenders of the status quo place blind faith into their hope that Chicago can somehow hang on until enough pensioners die, which probably won’t be until the middle of the century. They offer no credible solutions. Nothing. They’re as delusional as Gerald O’Hara meticulously counting out his Confederate bonds in Gone With The Wind–“All we have left”–after General Robert E. Lee surrendered.
There’s a way out–changing state law so municipalities and government agencies can declare bankruptcy, which is something Bruce Rauner, Illinois’ reform governor, favors. But the Democrats and the public-sector unions will never agree to that.
John Ruberry, who moved from Chicago to the suburbs in 1999, regularly blogs at Marathon Pundit.