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Chicago, IL

The windy city has quite a problem. In the face of underfunded pensions, the city did what many government bodies do – it took a holiday.

For several years at the start of this decade the city contributed less to its pensions than it should have. The decision was out in the open for everyone to see.

Now the holiday is over, and Chicago must come up with hundreds of millions of extra dollars a year. That’s money it doesn’t have.

Mayor Rahm Emmanuel tried to force a pension overhaul on the union members, including teachers, city workers, and first responders. His plan was quashed when the state supreme court ruled against a similar initiative by the governor regarding state level pensions.

The court ruled that, since pensions are contracts, they cannot be impaired. The union workers must get every penny that previous administrations promised, no matter how infeasible the cost.

Now the mayor has proposed a massive property tax increase. Without it the city will have to lay off workers, including policemen and firefighters, forgo street repair, and end its rat-control program.

Bond rating agencies already cut Chicago debt to junk status. Now the city sounds like it will move quickly toward junkyard status. It’s no wonder that Chicago just displaced Detroit as the city with the biggest drop in value in the S&P Case-Shiller Home Price Index.