Rahm Emanuel Says Chicago Pension Crisis "Improving", Facts Show He Is Lying

Tyler Durden's picture

Submitted by Michael Shedlock via MishTalk.com,

Chicago Mayor Rahm Emanuel brags about balancing the Chicago budget and fixing the city’s pension plans. Reuters writer Dave McKinney took the lies hook line and sinker.

Mark Glennon at Wirepoints Illinois separates fact from fiction in his article Chicago’s Friday Bunk Dump. This is a guest post by Glennon.

Chicago’s Friday Bunk Dump

Fridays in the summer are a great day to dump news you don’t want scrutinized, as reporters will tell you. Today, we got a new financial report from the city, the actuarial reports for its police and firefighter pensions and news of a private offering by Chicago’s school district.

The Report

First, the city released a carefully written, glitzy, Annual Financial Analysis. At least they put it online this year, a departure from the past, but that’s probably because it’s such meticulously prepared misinformation. Hooray, said most headlines and Mayor Emanuel in his cover letter: The 2017 deficit for the city will only be $138 million.

Only under a perverted meaning of “deficit,” they should have added. The report means little because it doesn’t include losses sustained in pensions and tax hikes for pensions deferred to the future, and it’s pensions that are Chicago’s primary problem. The kicked can isn’t included. Instead, the report is centered on near term, annual contributions to the pensions, which are made up by politicians and are inadequate even using the phony accounting that goes into them. That’s a primary reason why unfunded liabilities grow routinely.

Specifically, here’s what they didn’t tell us: The deficit appears low now because taxpayer contributions gradually ramp up and then, in 2020, go up further to whatever-it-takes, sky’s-the-limit, annual amounts sufficient to fund the pensions, and property taxes automatically increase to cover those amounts.

That’s for the police and firefighter pensions. For the small Laborer’s fund, that date is 2022, paid for mostly out of a telecom tax. MEABF, the city’s largest fund, will be dealt with in a yet-to-be announced plan funded by a “dedicated revenue source,” the city tells us, which means a new tax of some kind.

Following is a schedule of taxpayer contributions to the police and firefighter contributions, taken from the report. Those will have to be covered by property tax increases. Expect the same on different taxes for the other two pensions.

chicago police and fire contributions

The city gloats in the report that, “For the first time since 2011, the gap for the coming year is put forward without separate consideration of the City’s pension funds. As of July 29, 2016, the City has identified a permanent, reoccurring source to fund three of its four pension funds.” That source is years of tax increases that haven’t been properly explained to the public.

Most reporters have accepted the report as good news. Perhaps the worst was Dave McKinney at Reuters, whose headline is, “Chicago deficit narrows despite pension uncertainty.”  To the contrary,  a better headline would be, “Chicago ignores pension tax certainty to claim deficit narrows.”

The same issue plagues city budgets, which is why Rahm regularly gets away bragging about balancing the city’s. “This is the fourth year in a row we have balanced the budget,” he said in his last budget address. In fact, the city lost about $5 billion last year (though that results largely from a change to more realistic accounting standards) and about $1 billion in each of the previous four years, according to its own financial statements.

Actuarial Reports for Chicago Police and Firefighter Pensions

Today, I finally got the actuarial reports for the Chicago police and firefighter pensions, which I had filed a Freedom of Information Act (FOIA) request on July 8.

For the police pension, Net Pension Liability (that’s the term for unfunded liability under the new accounting standards) worsened by $260 million, ending 2015 at 8.97 billion. The funded ration worsened from 26% to 25.4%.

For the firefighter’s pension, Net Pension Liability worsened by $304 million in 2015, ending the year at $3.78 billion. Its funded ratio worsened from 23% to 21.7%. That’s actually much better performance for the year than I expected. However, with funded ratios near 20%, these pensions are in truly horrid shape.

Together with the two other Chicago pensions whose reports were released earlier, the total Net Pension Liability for the city is $33.8 billion and they are 23% funded in aggregate. Obviously, that’s far worse than the $20 billion total that’s been commonly reported over the past year. Much of that change results from the shift to new, more realistic accounting standards.

You can add another $10 billion for the CPS pension. We’ll try to add it all up soon for all the other overlapping pension obligations when we can — Cook County, Chicago Park District, Cook County Forest Preserve, Metro Water & Reclamation District, RTA, CTA and state pensions.

None of these numbers include healthcare obligations, which are very hard to nail down, and are not addressed in the Annual Financial Analysis.

Chicago School Borrowing

Also today, CPS announced it borrowed another $150 million. What’s unusual is that it was done as a private placement — a reflection of its difficulty accessing the usual public markets. We don’t know all the terms of the deal because CPS did not release the key documents. The CPS says it will release those on September 2.

September 2, eh? That would be the Friday before Labor Day weekend. Credit these folks with consistency.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
PGR88's picture

 

Who in their right mind would loan the City of Chicago money?

 

Or is it just front-running what will eventually be another Fed QE program - buying up bankrupt municipal bonds?

InjectTheVenom's picture

Rahm the nine-fingered dwarf

Perimetr's picture

I'd like to improve that lying sack of shit with a 12 guage shotgun.

Here2Go's picture
Here2Go (not verified) Perimetr Jul 31, 2016 2:20 PM

or a ham sandwich

Manthong's picture

..how about a 12 Ga. with a ham hock slug?

https://www.youtube.com/watch?v=YvDcJydVcHo

15 seconds

 

JRobby's picture

He appears to be descended from an ancient people's who engaged in an unspeakably foul and perverse trade or practice that was secretive and dark, yet somehow deemed to have an unspoken role in society.

So, yes he's lying.

Dutti's picture

I met some smart retired US citizens recently who reside now in a foreign country.
Their property taxes had risen over the years to over $16000 before they sold their house in a Chicago suburb a few years ago.
Now apparently the current owner of "their" house tries to sell it at a loss and his property tax bill is now over $23000.
Better to sell at a loss than waiting any longer it seems!

cheka's picture

got assurance of bailout from nyc/dc?

if so = improving

Handful of Dust's picture

Rahm, the Lying democrat, said crime is under control in Chicago...I guess because only 24 people were killed this weekend so far.

Stuck on Zero's picture

I have three friends who live in the Chicago area. All three want to leave for Austin.

Delphi_Addiction's picture

Shit! No more liberal expats moving to Texas, please! Battleground Texas is still a punchline, though not sure how much longer.

Having lived in both, they are similar. Although Austin trades three months of shitty weather for nine of amazing weather. Chicago, the opposite.

There's also the liberal hell-hole difference. With Austin being a few years behind on account of it's less afflicted condition. Although The Republik of Travis County is still a liberal stronghold, they are almost always outflanked at the state level of decision making.

Truth be told, ATX is not really livable anymore. Come in on a Friday afternoon when UT's in session. Traffic is beyond horrific. Millennial hipsters love living in squalid poverty. And they can rely on the Statesman to lie to them each morning. A fun place to visit though- like Portland, San Francisco, and other places inhabited by people with collective liberal mental disorders, enjoying $10 beer from roof-top bars and too many attorneys sucking off the teat.

I live an hour outside. These Chicago liberal expats, like their West Coast breathren, almost immediately begin infecting our area as soon as they close on their city mortgage. I handicap the half life of the average resident at two weeks when TSHTF. Depending on your access to firearms. Shooters currently prefer to focus on young women. Because it's hard to conceal your legal Glock when you're dressed like a whore, drunk and playing Pokemon Tinder at 2 AM.

Point being, send 'em down, I guess. The sooner they defect, the sooner prop taxes divide by a smaller denominator and the liability can no longer defy the laws of Yellen "money," the sooner IL goes down, the sooner Moody's downgrades, the sooner the debt must be sold out of other pension ponzi schemes, the sooner the country dominoes, the sooner we can exit this Fourth Turning and move on to another 60 years of Keynes being buried.

I don't want to follow Venezuela. But it's not my call.

Maybe Wade can balance the budget with his new contract. 

ISawThatToo's picture
ISawThatToo (not verified) Dutti Jul 31, 2016 4:09 PM

Banbait #487

Yup.

Got sick of it all under Daley, and moved to NW Indiana right before the Khazarian took over.

Was renting a three-bedroom home for $1,200/mo. A few years ago a friend from the NW burbs of Chicago visited. During his stay he inquired as to what my rent was. He figured it was at least $3,000/mo., as just his property taxes on a tad larger home was $1,000 a month. He was floored by the realization of what he was paying to, in effect, just rent his house from the corrupt in his NW Illinois burb--and this before the Khazarians' grifter nut and insurance.

His wife talked him out of selling, and now they are paying $1,500 a month to the corrupt for their small piece of the fiefdom. A neighbor of theirs rents out his home at the same rate as the property taxes on it, as no one will pay more. i.e. property taxes have outstripped rents to the tune of over 100%.

Yup, it's in the Protocols:

Protocols 20:6  "A tax increasing in a percentage ratio to capital will give much larger revenue than the present individual or property tax, which is useful to us now for the sole reason that it excites trouble and discontent among the Goyim."

Protocols 6:4 "The aristocracy of the Goyim as a political force, is dead - We need not take it into account; but as landed proprietors they can still be harmful to us from the fact that they are self-sufficing in the resources upon which they live. It is essential therefore for us at whatever cost to deprive them of their land. This object will be best attained by increasing the burdens upon landed property - in loading lands with debts. These measures will check land-holding and keep it in a state of humble and unconditional submission."

Manthong's picture

Hey, you know,,,

Maybe ham hock cluster munitions would be effective against muslim radicals like ISIS.

Or domestic terrorists with similar belief systems like Goldman Sachs, or any of the Hollywood or MSM moguls.

LowerSlowerDelaware_LSD's picture
LowerSlowerDelaware_LSD (not verified) Manthong Jul 31, 2016 2:36 PM

Two problems here:

1) Politicians lie. Some (statists) the majority of the time.

2) Government  (FREE!!!) schools are so bad that the vast majority of adults can not comprehend the problem.

 

Solution: Forced reading of ZH.

stacking12321's picture

agree with the problem, bad "solution" though.

forcing someone to do something is the work of a tyrant.

respect peoples' autonomy and don't use force, that's the path to a civilized society

LowerSlowerDelaware_LSD's picture
LowerSlowerDelaware_LSD (not verified) stacking12321 Jul 31, 2016 3:15 PM

Sorry, I thought it was obvious.

/s the last line...

ACES FULL's picture

Rahm is bragging about the length of his dick in that thumbnail pic.

Berspankme's picture

Obama would know the truth. He used to suck Rahm off in the chicago bathhouses. Axelrod too. Apparently Obama liked white men

Consuelo's picture

 

 

 Pickles with that...?

Arnold's picture

One word, Benjamin, just 1 word:

 

Fifty Year Bonds.

JRobby's picture

"buying up bankrupt municipal bonds" already happening, pre-BK of course.

"Now what can be privatized in this restructuring?"

May the Farce Be With You!

HoserF16's picture

Fucking NWO Zionist Bastard. 

yellowsub's picture

Is he saying it's improving like how the gun control is reducing shooting deaths?

KnuckleDragger-X's picture

Just turn Chicago over to the Mafia, who are, at least, honest competent criminals......

Mountainview's picture

Can't they go chapter 11 (or similar for public entities) first?

Omen IV's picture

If Al Capone was alive today he could balance the budget by keeping the city employees inline - it is a shame he died of syphliss instead of Bill clinton

I Write Code's picture

How do you know he was lying, were his lips moving?  Anyway the modern liberal doesn't count any statement about numbers as lying, numbers are for dweebs, and banksters, maybe.

Normalcy Bias's picture

Emanuel is the Captain of The Titanic, but he'll be elbowing children and the handicapped out of the way to be sure he's the first one in the lifeboat.

CuttingEdge's picture

Unfair character aspersion on the Titanic captain - he went down at the wheel (allegedly).

Normalcy Bias's picture

You may want to read the entire comment.

SmedleyButlersGhost's picture

He was probably duct taped to the wheel by his crew for being such an arrogant prick idiot

Normalcy Bias's picture

That NAILS it...

Thanks for the laugh!

iAmerican's picture

Under Satan's "Rabbinical Talmudism" he was taught from birth to lie.

Miss Informed's picture

Not to worry, his strong "Judeo-Christian" values will keep him from ripping off Chicago pension holders....Just watch!

Dormouse's picture

All this accusing politicians of lying is ridiculous. What matters is how you feel when they speak. Whether they're a democrat or a evil, bigoted republican—it's the message you hear or want to hear that should determine how you vote. Do you believe in an inclusive, fair society or one of hate and division? Truth has nothing to do with feelings or the actual message.

Tinky's picture
Rahmulus killed Remus in 771 BC, and apparently hasn't stopped killing yet.
NoWayJose's picture

It's improving for Rahm - he is getting closer to leaving office and passing the mess onto his successor!

ISEEIT's picture

Tick toc mother fuckers.

Yen Cross's picture

   Rahm and his douche bag Zerocare  brother should be dragged through a field of broken glass, lightly salted in teriyaki glaze, wrapped in foil, and put in the oven at 350 for 4-6 hours.

  Then the meat should be flash frozen and flown to one of the canibal tribes in New Guinea.

Jstanley011's picture

I like the way you think.

Skiprrrdog's picture

Do you REALLY hate the cannibals that much? I am sure they would rather have something more edible, like bat feces...

lester1's picture

6 dead 37 shot since Friday in the ghettos of Chicago.

 

Black Lives Matter silent !

Bay of Pigs's picture

They had a great month.

July to Date
Shot & Killed: 63
Shot & Wounded: 370
Total Shot: 433
Total Homicides: 67

 

Skiprrrdog's picture

I think some of the crazy brothers from the South Side, the ones with the pliers and blowtorches, should have a heart to heart with Rahmbo...

JRobby's picture

They do not work for the city

Fuku Ben's picture

If you lie at the same time as you're trying to sell junk bonds is that a crime?

Who and what caused the Chicago bond rating to go to junk anyway?

If the pensions estimated annual returns are as ridiculous as the 7.5% for CALPERS this is just one more disaster waiting to happen. It's a shame really. The same leadership that give the orders to the police, fire, military etc are some of the biggest criminals stealing billions (trillions nationally) from them. I don't think most of these guys even realize they're being sold down the river and will be sacrificed when the time is right.