Moody’s Investors Service has downgraded to A3 from Aa3 the rating on the City of Chicago’s (IL) $181 million of outstanding rated motor fuel tax debt. The outlook has been revised to negative.
Surprises no one. Barely qualifies as news actually.
The City’s broke. Unemployment (real unemployment, the U6 number) is out of control and people simply don’t have the means to support driving when they don’t have to. Tie that in with Springfield’s ability and desire to continue to kick-the-can down the road and Chicago may just get screwed on its portion of the fuel tax.
It’s generally dumb anyway that Chicago gets a kick-back on the state’s fuel tax anyway as the city has it’s own fuel tax. It’s just robbing Peter to pay Paul. Round and round the money goes.
A leading bond-rating agency has downgraded the Chicago Board of Education’s debt in the wake of the settlement of the Chicago Teacher’s Union’s recent strike.
Moody’s Investor Service had already downgraded the Chicago Public Schools’ bond rating outlook to “negative” from stable in July, and cited Thursday the rating agency’s “view that the district will be hard-pressed to make the budget adjustments necessary to close an estimated $1 billion budget gap for fiscal 2014.”
The schools’ downgrade to an A2 rating “reflects a weakened financial profile” born of depletion of reserves, a coming jump in pension payments after three years in which state law was changed to reduce the payments temporarily, slow payment of state money–and the recent strike, Moody’s said in a release.”If progress is not made toward improving the financial condition and liquidity of district operating funds, or if challenges arise in making the required pension contributions, the district’s general obligation credit quality will be impaired,” according to the release.
Strikes by other unions, more delays in state funding or “unmanageable” increases in pension costs could result in further ratings downgrades, Moody’s warned.
A spokesperson for Chicago Public Schools wasn’t immediately available to comment on the downgrade.
via Chicago Tribune.
CPS is falling apart. The biggest losers here are the poor families generally on the South and West sides that have no other options for their children. It’s the false choice of failing CPS school A or failing CPS school B.
Rahm caved. He owns this. Epic fail.