Wall Street debt rating agencies are giving Cook County government higher marks than the city of Chicago, in part because of County Board PresidentToni Preckwinkle’s controversial move last year to raise the sales tax by a penny on the dollar.
All three major agencies recently upgraded the county’s credit outlook to stable from negative. Each cited the sales tax increase that Preckwinkle pushed through a divided County Board. (The tax hike reversed moves during Preckwinkle’s first term that lowered the county sales tax, a pledge she first got elected on in 2010.)
Most of the $474 million a year raised through that tax increase will be pumped into a county government worker pension system that had a $6.5 billion funding shortfall.
“The county is now projected to pay down unfunded pension liabilities by the mid-to-late 2040s, a marked improvement from prior projections of asset depletion by 2039 or earlier,” Moody’s Investors Service stated in its assessment of county debt. The agency also noted the county’s vast public health system “has posted two years of consecutive operating surpluses ... despite significant declines in county taxpayer support.”
Moody’s, Standard & Poor’s and Fitch Ratings came out with ratings as the county prepares to refinance about $303 million of debt through a new bond issue. Each agency considers county debt to be solidly in the “investment-grade” range — although in each case the grade still falls several notches below the agencies’ top ratings.
That compares with city debt ratings that are in junk territory or not as high on the investment-grade scale and warnings of potential downgrades to come if the city doesn’t further address its pension woes.
Moody’s last year lowered city debt to junk status, and Fitch places it just one notch above junk — or “speculative” in analyst parlance. S&P, meanwhile, puts it three notches above junk. All three have warned of further downgrades if Mayor Rahm Emanuel doesn’t come up with plans to fix all of the city’s pension shortfalls.
Although Emanuel has enacted a plan to fix the city’s underfunded police and fire pension funds, and has a plan in the works for the city laborers' retirement system, his efforts will take longer to achieve results than the county’s. And he’s still searching for a solution to fix the city’s retirement fund for municipal workers, which is nearly $10 billion short of what’s needed to pay benefits.
The mayor also is still working to phase out annual budget shortfalls and frowned-upon borrowing practices that became routine under former Mayor Richard M. Daley and dug the city into a deep hole.
Despite their agreement over the county’s generally sound finances, S&P lowered the county’s debt rating by one notch, stating that it needs to do more to build up its cash reserves. The lower rating also reflects that the county has “a shared tax base” with the financially troubled city and Chicago Public Schools.
Preckwinkle, who has warned of a tough budget coming for 2017, said in a statement that the agencies' stable outlooks reflect the county’s “willingness to tackle its fiscal challenges and not kick the can down the road" but also warned “our work is far from done.”(Hal Dardick)
What's on tap
*Mayor Emanuel will speak to the graduating class of Clemente High School.
*Gov. Bruce Rauner has no public schedule.
*City Treasurer Kurt Summers continues to speak out against interest rate swap deals, this time at a 10 a.m. Illinois House Revenue & Finance Committee hearing at the Bilandic Building.
*Chicago Housing Authority CEO Eugene Jones speaks to the City Club of Chicago at noon.
What we're writing
*Rauner's post-session tourtakes political route.
*Rauner makes good on pledgeto veto Democratic spending bill.
*Emanuel, Tunney say they've gotWrigley plaza booze rules deal; Cubs say not so fast.
*Head of Illinois Lotterystepping down; health reasons cited.
*Chicago leaders offer sympathiesafter Orlando nightclub shooting.
*CPS says summer schoolto go on as usual.
*IPRA finds Chicago cop at fault in shooting,10 months after he quits.
*Emanuel administration moves to settleChatman police shooting case.
What we're reading
*How Chicago cops got confessionfrom suspect in Hadiya Pendleton killing.
*The lonely road ofstaying clean.
*Where are they now: Ex-Blagojevich aidestarts anti-DeBlasio effort.
From the notebook
*Guess who's back I:Former Democratic Gov. Pat Quinn, always known as the king of the Sunday news conference, resurfaced (when else?) Sunday with a news conference to talk about a petition drive for term limits on the mayor of Chicago. Sounds like it's not going anywherethough.
*Guess who's back II:Former Republican U.S. Rep. Aaron Schock, whose campaign spending has been under federal investigation, offered the oldif mistakes were made, they were honest ones line tohis hometown newspaper.
*Emanuel confident on Airbnb vote:There’s been a lot of sturm und drangaround proposed regulations for online rental platforms like Airbnb, but Mayor Emanuel remains confident aldermen will give his plan the go-ahead later this month.
Speaking Friday to attendees at an affordable housing event, the mayor talked up the 4 percent tax for homeless services included in his proposed ordinance governing online rentals. “In two weeks, the City Council also will pass landmark legislation as it relates to the industry, emerging industry, Airbnb,” he said. “And we have proposed a 4 percent surtax that will go directly into homelessness, on the new industry.”
Emanuel wanted a vote on his plan in May but held it back as aldermen and Airbnb officials battled over how to best control the rentals that are becoming increasingly prevalent in some of Chicago’s hipper neighborhoods. The company contends it’s helping Chicagoans make extra money by renting out spare rooms to tourists, thereby threatening the hotel industry.
But some aldermen say residential parts of their wards are turning into hollowed-out party zones with large numbers of condos being used solely as rental units for out-of-towners with no full-time residents.
Emanuel’s measure would have set limits on the number of units in different-sized buildings that could be rented, with the 4 percent tax going to cover administration of the new rules as well as fund homeless services. He said in May that it would have passed then had he called it for a vote. It is scheduled to come up for a vote at the June 22 City Council meeting, and negotiations are ongoing to craft a version of the proposal that will strike a balance.(John Byrne)
*About Jackson’s Hillary endorsement ...:The announcement Saturday that the Rev. Jesse Jackson was giving his personal endorsement to Hillary Clinton’s Democratic presidential campaign wasn’t much of a surprise.
Though touted by the campaign of the former secretary of state, Jackson’s backing already had been announced earlier last week when she was named the keynote speaker for the International Women’s Luncheon at the 50th annual Rainbow/PUSH Coalition convention on June 27.
Jackson is founder and president of the Rainbow/PUSH Coalition, and the announcement of Clinton as keynoter came from his wife, Jacqueline Jackson, who is chair of the luncheon.
The Clinton campaign said the Rev. Jackson was endorsing Clinton as a private citizen because “the Rainbow/PUSH Coalition does not endorse political candidates.”
Ironically, Vermont Sen. Bernie Sanders had endorsed Jackson’s bid for president in the 1980s.(Rick Pearson)
*The Independent Map drive:The Illinois State Board of Elections is expected to take another step Monday toward validating the petition drive to ask voters to change the state’s constitution to take some of the politics out of the redrawing of Illinois’ legislative district boundaries.
Supporters of the Independent Map amendment said the elections board is expected to consider its petitions, with the board’s general counsel, Kenneth Menzel, recommending “that the petition be deemed valid at this point.”
Menzel’s recommendation notes that a 5 percent sample of the group’s 563,974 signatures was used for verification by staff. Of that sample, it was determined that the petition contained a minimum number of 375,613 and a maximum number of 395,021 unique valid signatures.
The proposal needed a minimum of 290,216 valid signatures to qualify for the November ballot.
Still, the proposal faces a court challenge as to whether it meets the strict conditions allowing for a petition-driven change to the state constitution.(Rick Pearson)
*Birthday shout-outs:On Sunday, 37th Ward Ald. Emma Mitts turned 61 and Chicago Public Schools CEO Forrest Claypool turned 59.
*The Sunday Spin:On this week's show, 21st Ward Ald. Howard Brookins talked about CPS' money woes and pushed back against Gov. Rauner's reference to some schools as “crumbling prisons.” Former Republican Gov. Jim Edgar discussed the importance of reaching a state budget deal amid the impasse at the Capitol. And Michael Golden, author of “Unlock Congress,” talked about the presidential race and how congressional races could be swayed by the presidential contest. Listen to the full showhere.
Follow the money
*The Independent Maps group reported another $391,000in contributions, led by $250,000 from Allstate Insurance Co. and $125,000 combined from suburban manufacturer Dover Corp. and its CEO, Robert Livingston.
*The Chicago Regional Carpenters fund gave $75,000total to three funds controlled by Democratic House Speaker Michael Madigan. All told, the union PAC has contributed $1.1 million to Democrats since Jan. 1, nearly all of it to potential Republican targets this fall.
*The Illinois Sunshine Project looks at top campaign contributionsfor the week.
*Track campaign contribution reports in real time with this Tribune Twitter account: https://twitter.com/ILCampaignCash
*Orlando nightclub shootingworst in U.S. history.
*Families wait for informationon loved ones after mass shooting in Orlando.
*Ex-wife of Orlando shooter:"He beat me."
*Trump tweets creditfor "being right" on radical Islamic terrorism after Orlando mass shooting.