Chicago is facing a $426 million budget shortfall next year and needs to pay down a $20 billion debt to its workers’ retirement funds that’s left it with a lower credit rating than any big U.S. city except Detroit. Bloomberg’s Kate Smith has more on “Bloomberg Markets.”
Chicago lawmakers recently moved towards pension reform, but were denied by the courts who deemed the city’s reform proposals to be in violation of the Illinois constitution. The State of Illinois does not allow cities to declare bankruptcy.
On May 12, 2015, Moody’s Investors Service downgraded Chicago’s credit rating. Of course, bad credit increases the costs of borrowing.
Chicago is second to Detroit as a major city with junk bond ratings from major institutions. But Chicago’s debt and unfunded liabilities are more than three times higher than Detroit’s were when Detroit declared bankruptcy in 2013.
Chicago’s debt is calculated to be over $60,000 per household.
It’s another sign of the state’s troubled finances and lack of a budget. CBS 2’s Dorothy Tucker reports.
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