Is Chicago entering a financial doomsday?

[Saint_Cad]

@Ravenman

So much for the 10th Amendment.

I agree but that is SCOTUS’s line of thinking - that the “common defence and general welfare” part of T&S means it is independent of the enumerated powers.

[Ravenman]

@Saint_Cad

I agree but that is SCOTUS’s line of thinking - that the “common defence and general welfare” part of T&S means it is independent of the enumerated powers.

If that were the case, then the Supreme Court would not have said in South Dakota v Dole that funding limitations could not be coercive. Some arm-twisting, yes, but putting a gun to the states’ head over certain policy issues is not covered by the spending power.

[Saint_Cad]

@Ravenman

If that were the case, then the Supreme Court would not have said in South Dakota v Dole that funding limitations could not be coercive. Some arm-twisting, yes, but putting a gun to the states’ head over certain policy issues is not covered by the spending power.

True but what does coercive mean to the court because in SD v Dole it meant raise your drinking age or we’re taking away 5% of your highway tax. If that’s not coercive then what is?

[CarnalK]

@Saint_Cad

True but what does coercive mean to the court because in SD v Dole it meant raise your drinking age or we’re taking away 5% of your highway tax. If that’s not coercive then what is?

More than 5% is what we’re left to assume. But part of the decision relates to the funds being withheld. Withholding highway funds might pass muster for a drinking age, where young drunk drivers are overrepresented on roadways, but not likely for an immigration spat.

[Ravenman]

The Court basically said that 5% of funds is not the point at which pressure turns into compulsion. Restricting 100% of law enforcement grants to cities that don’t enforce Federal laws would pretty obviously be compulsion.

[Ravenman]

Left-coast judge knocks down the sanctuary city EO:

Order-Granting-Motions-to-Enjoin-9-a-of-Exec-O.pdf

[Silver_lining]

@ITR_champion

True, and Chicago went past that point years ago. They’ve got the highest sales tax among cities in the country, complementing high incomes taxes and other taxes. The result? People moving out. The population of Cook County decline by 0.4% in the past fiscal year while most other large cities were growing. Moreover, millionaires are heavily represented among those who are fleeing.

People like paying less in taxes. Businesses like paying less in taxes. When taxes are too high in one place, people move to other places. You cannot fund endless enormous government by continually raising taxes on the rich or on anyone, because people can respond by moving out. Taxpayers moved out of Detroit, and it ended up going bankrupt. That will happen to Chicago as well. Can’t say exactly when, but it will happen.

Consider a few facts:

Chicago Public Schools managed to sell $725 million in bonds. Only after Mayor Rahm Emanuel hustled to New York to make a personal pitch to buyers. Only after CPS agreed to pay punishing interest rates of up to 8.5 percent. Only after CPS scaled down its original bid to sell close to $1.2 billion in bonds. … CPS will pay 8.5 percent interest at a time when the federal funds rate is bouncing barely above 0 percent. That’s simply staggering. … CPS expects to pay $538 million in debt service this year on the total of $6.2 billion it owed before this bond sale. This school year, that debt service will divert about $1,370 for every student to the district’s lenders.
http://www.chicagotribune.com/news/opinion/editorials/ct-chicago-public-schools-bankrupt-emanuel-ctu-edit-0204-20160203-story.html

As of 2015, MEABF had $9.913 billion fewer assets than state actuaries said it needs to generate enough investment returns to fund its retirement promises. LABF is $1.23 billion short.

Along with the Policemen’s Annuity and Benefit Fund of Chicago ($8.1 billion), the Firemen’s Annuity and Benefit Fund of Chicago ($3.53 billion) the Chicago Park and Retirement Board Employees ($514 million) and the Chicago Teacher’s Pension Fund ($9.63 billion), City of Chicago taxpayers are on the hook for $32.92 billion in pension “underfunding.”
$999 million out, $90 million in: Chicago pension funds see the abyss, shrug it off | Chicago City Wire

That’s a lot of money.

And is the state of Illinois going to ride to the city’s rescue with a bailout? The state’s situation is worse than the city’s. They’re $267 billion in debt.

Cook county has 10.5% COUNTY TAX to support all of these pensions funds and fats cat’s and it’s still not enough. They can;t even afford to pay their own teachers.

Chicago is at risk of collapsing under its own weight. Unlike Detroit, there is not auto like nation type of bailout to save the city. Crime is an issue. Too many people are shot.

I know some people born and raised in Chicago that has had it and are moving out of the city and state.

[bob_2]

In the UK, if a county/metropolitan district was heading for an unsustainable budget deficit, the government would step in and appoint someone with clout to sort the mess out. Could the Feds not do something similar in the USA?

[PastTense]

Illinois had its bond rating downgraded to one step above junk by Moody’s Investors Service and S&P Global Ratings, the lowest ranking on record for a U.S. state, as the long-running political stalemate over the budget shows no signs of ending.

S&P warned that Illinois will likely lose its investment-grade status, an unprecedented step for a state, around July 1 if leaders haven’t agreed on a budget that chips away at the government’s chronic deficits. Moody’s followed S&P’s downgrade Thursday, citing Illinois’s underfunded pensions and the record backlog of bills that are equivalent to about 40 percent of its operating budget.

https://www.bloomberg.com/news/articles/2017-06-01/illinois-bonds-cut-to-one-step-above-junk-by-s-p-over-stalemate

[Shagnasty]

@bob_2

In the UK, if a county/metropolitan district was heading for an unsustainable budget deficit, the government would step in and appoint someone with clout to sort the mess out. Could the Feds not do something similar in the USA?

The U.S. is a collection of semi-sovereign states. The federal government can’t really tell Illinois what to do because it doesn’t have that kind of authority over it at least not directly. If it was just a few counties and municipal districts in Illinois, then Illinois could force them to do whatever was needed because counties and towns are an administrative subset of the state but that isn’t the same relationship that states and the federal government have. We are talking about the whole state of Illinois in this case so they are going to have to fix it themselves.