"Chicago sticks out for all the wrong reasons," said Rachel Barkley, a municipal credit analyst at Morningstar Inc. (MORN), referring to a public pension system that is only 35 percent funded, compared to New York's 60 percent and San Francisco's 88 percent.
(...) Just raising taxes, which could cause businesses to leave, or cutting services, which would penalize residents, won't be enough, said Michael Pagano, dean of the College of Urban Planning and Public Affairs at the University of Illinois at Chicago.
"I don't think either one is even a possibility," he said. "Everybody's going to have to give something."Put another way, this is what the budget problem looks like.
The shortfall amounts to about $7,100 per Chicago resident. That's nearly eight times the per person cost of the unfunded pension liability in Detroit, a city that saw its population plummet in the years before it went into bankruptcy earlier this year. Add in the unfunded liability for Chicago teacher pensions, and the total shortfall jumps to about $27 billion.
City officials say the shortfall is due largely to investment losses during recent economic downturns, to workers and retirees living longer and to increases in benefits. The city's annual contributions to the funds, set by state statute, also were well below what was necessary for meeting its obligations, according to a Morningstar analysis.
Under state statute, those contributions are now scheduled to more than double next year, to about $1.07 billion. Emanuel, a former White House chief of staff who is up for re-election in 2015, says the increase is about equal to the annual cost of having 4,300 police officers on the beat or resurfacing 16,000 city blocks.
If the city doesn't cut services and pension benefits aren't changed, he says, the annual payment would require a 150 percent hike in property taxes - an increase he calls "unacceptable." Chicago Public Schools' payment to the pension fund for Chicago teachers also is slated to increase next year, from $196 million last year to $600 million.You begin to see the problem. Liberalism is expensive and doesn't pay for itself - it spends money while generating none. Government can't (well, shouldn't) grow itself beyond the private sector's ability to pay for it. Even though this happens all the time on all levels of government, the burden and ultimately responsibility still falls back on the taxpayer when the bills come due.
In the United States, each citizen's share of the federal debt is roughly $193,000. What do we do? Realize that new government programs - no matter what they promise - are things we can't afford as a country. We should have elected Romney the budget cutter when we had the chance. Yet repealing Obamacare certainly comes to mind as a priority! Don't take any "budget deals" that don't actually cut spending lying down - get on the phone. We need to be so loud collectively that the government can't ignore us, knowing we'll boot them from office if they don't.