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Chicago Residents Dragged Down by Pension Burden


The shakeup in Illinois’s Democratic primary may be making all the headlines, but pensions remain the biggest story in the Land of Lincoln. And Chicago has it worse than anywhere else; the situation is so dire that the New York Times is warning of a Detroit-like slide.

According to Chicago’s official estimates, the total pension debt that falls on city taxpayers—a combination of the city’s pension funds and funds from the surrounding county—amounts to $63.2 billion. This is a massive burden for a city operating on an estimated $3.02 billion in revenues in 2014, and this may actually be understating the size of the problem: A Moody’s report using more accurate estimations of the rate of return found that the city’s true burden is closer to $86.9 billion. As the Illinois Policy Institute notes, this amounts to $84,000 per household; the median household income is only $47,371.

Worse, S&P is piling on, changing the outlook on the state’s A-plus rated bonds from stable to negative, citing the city’s pension crisis. Reuters quotes the report:

“We could lower the rating within the next two years if the city substantially draws down its reserves in an effort to increase its pension payments in line with state mandates, regardless of whatever relief the state legislature may provide,” S&P said in a report.

Whoever wins the governorship in 2014 will have his work cut out for him.

[Image of Chicago skyline courtesy of Shutterstock]

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  • bpuharic

    I’m REALLY glad WRM has an obsession on this. After all we have NO other financial problems, such as the gaming of the regulatory system, as described here:

    Banks would NEVER do anything to hurt America. Bankers are ALWAYS interested in the public good. It’s those nation public unions, you see.

    Thanks. Happy to see you’re on top of it.

  • Corlyss

    “this may actually be understating the size of the problem:”
    I think until it’s proven true, it should be treated as true. During this pension crisis in so many places, I’ve wondered if there were ever any audits of the pension funds and if the auditors were in bed with the city politicians who need to keep lying about how badly unfettered union greed and corrupt pols have damaged the cities they are suppose to serve.

  • Pete

    Another case of the bloated public sector killing the goose that laid the golden eggs.

  • tartanmarine

    I retire 11/30 due to my pulmonary fibrosis. On 12/1, I will no longer be a resident of Illinois or of Cook County especially. I will link to this from my Old Jarhead blog. (

    Robert A. Hall
    USMC 1964-68
    USMCR, 1977-83
    Massachusetts Senate, 1973-83
    Author: The Coming Collapse of the American Republic
    All royalties go to help wounded veterans
    For a free PDF of my 80-page book, write

  • lukelea

    Even if the benefits are dialed way back, my intuition tells me these kinds of debt obligations could propel a massive flight from the cities. Could the same thing happen at the state level?

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