City of Chicago’s cash cushion plummets, debt triples, arrests drop, water use rises

Chicago Sun Times ^ | July 26. 2013 | Fran Spielman

[Zakeet]

Mayor Rahm Emanuel closed the books on 2012 with $33.4 million in unallocated cash on hand — down from $167 million the year before — while adding to the mountain of debt piled on Chicago taxpayers, year-end audits show.

Last week, Moody’s Investors ordered an unprecedented triple-drop in the city’s bond rating, citing Chicago’s “very large and growing” pension liabilities, “significant” debt service payments, “unrelenting public safety demands” and historic reluctance to raise local taxes that has continued under Emanuel.

The 2012 city audits explain why.

[Snip]

The audits by the accounting firm of Deloitte & Touche provide a treasure trove of information about city finances and operations.

Interesting nuggets include:

[Snip]

• The 55 percent subsidy to retiree health care that Emanuel wants to phase out and retirees are suing to maintain cost the city $97.5 million in 2012.

• The condition of Chicago’s four city employee pension funds is growing ever more precarious. The firefighters pension fund has assets to cover just 25 percent of liabilities, followed by: Police (31 percent); Municipal Employees (38 percent) and Laborers (56 percent)

[Snip]

By July 31, Emanuel must release a preliminary city budget. It’s almost certain to include another massive deficit — strengthening the city’s case in contract talks with city unions — that will have to be closed with more layoffs, service cuts and new revenues.

[NVDave]

Well, there is, but only as an indirect way. You could look for a muni bond ETF that has significant exposure in its portfolio to Chicago paper.

There are ways available to the big players (like buying CDS’) but those aren’t available to the retail investor.

[Standing Wolf]

It may be called the Chicago Way but it started in California.

Before Tammany Hall in New York?

[isthisnickcool]

Many nights I tune in to the Chicago PD police scanner to listen in. It is not a city, it is a war zone. The angst, outcry and pants pooping over Zimmerman/Martin is a farce when the blacks in Chicago are murdering and maiming each other at a rate that is stunning.

[Dilbert San Diego]

See too, if they survive too many flash mob attacks. There are reports that the gangs are coming up out of the south side and the west side, and doing flash mob attacks on Michigan Avenue and the Near North Side areas. This is a wealthy area of Chicago.

And it’s not just Chicago. The gangs appear to be getting bolder, and more willing to come out of the ghetto and do what they do.

[Dilbert San Diego]

But Sharpton, Jackson, etc. don’t care if Negro youth kill other Negro youth. They only care if a white Hispanic kills a Negro youth. Then we have to have a meltdown over alleged racism and all that.

I’m really surprised the liberals decided to take this Zimmerman case, and make it a symbol of racism and profiling and all that. It’s becoming more known now that Trayvon was not a choir boy, and was indeed a gang banger in training. Some of that will come out, if there is a civil rights trial. Some of that will also come out, if Trayvon’s parents sue for a wrongful death judgement.

[TribalPrincess2U]

When they’re through knocking off each other there what keeps them from spreading to other cities? Normal people won’t have a chance of defending themselves from those who want to rob and torture between killings.

0skunk wants to do his part by putting blacks in ‘prosperous’ neighborhoods.

My neighborhood blacks seem to be normal folk but 0 wants to fix that. He keeps stoking the fires.

[expat2]

There aren’t any inverse muni ETFs (yet), but you can short any of the many positive muni ETFs.

[Spok]

Having learned nothing from the demise of Detroit, the road to hell begins to look like a freeway.

[reformedliberal]

The people living in those areas are rabid Democrats. They can and do afford private security. Probably they aren’t hiring personal guards to accompany them everywhere, but they could afford that if they needed to.

The ones I have known would never ever own a gun, carry a gun or use a gun. They will never admit to having been wrong, made a mistake or contributed to their own abuse.

They will shell out for security and never address the problem.

[Ken H]

City of Chicago’s cash cushion plummets, debt triples, arrests drop, water use rises

...it's dark and we're wearing sunglasses.

[pierrem15]

Bingo-- and the best part for the City is that the more broken it is, the more they can charge in water and sewer fees.

Zimbabwe on Lake Michigan

[pierrem15]

There are also burglary crews that drive out of Chicago to the near suburbs and rob homes there, returning to Chicago with their loot.

It's like a Viking raid in '92 Caprice.

[DaveA37]

Here comes another Detroit. Its just a matter of time.

[roadcat]

Here comes another Detroit. Its just a matter of time.

It's somewhat ironic how people criticize San Francisco. (Yeah, it's the gay minority that has control). But it's actually grown safer and richer, having lost more than half it's black population over the last 30 years or so, much of that from disappearing ghettos. From about 14 percent to about 6 percent now. There may be a correlation in terms of race relations and growth of a city. Just saying...

[ridesthemiles]

A thread here on FR a couple of days ago asked hich city (cities) would be next to declare bankruptcy....

I named
Chicago
Sacramento
St Louis
Houston
Kansas City, Missouri
Oakland
Vallejo- which already has some sort of bankruptcy running
Portland, Ore

[Vaduz]

In CA it started in the mid sixties.