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* Bloomberg…
Chicago bonds rose after the Illinois legislature cut more than $200 million from the city’s required 2016 payment into the police and fire retirement systems, a move to provide a partial reprieve from its pension burden.
Illinois’s General Assembly gave final approval Sunday to a bill that would reduce Chicago’s pension payments over the next five years. The average price of a general-obligation bond maturing in 2040 climbed 1.4 percent Monday to 91.6 cents on the dollar. That pushed the yield to 5.6 percent, the lowest since May 12, before Moody’s Investors Service announced that it cut the city’s credit rating to junk.
“It alleviates an immediate fiscal pressure,” said Gary Pollack, who manages $6 billion of munis as head of fixed-income trading at Deutsche Bank AG’s private-wealth management unit in New York. “That’s obviously positive for Chicago, which means it’s positive for the bondholder.”
The legislature’s action would give Chicago more time to find a way to plug a $20 billion pension-fund shortfall that’s left it with a lower credit rating than any big U.S. city except Detroit. The need to put more money into the cash-strapped retirement system has squeezed the city’s budget and led Moody’s to pull its investment-grade rank.
That rally is a tad premature.
* Greg Hinz…
Emanuel’s proposal passed the House 65-45 and the Senate 38-20. But legislative Republicans voted against it, including House GOP Leader Jim Durkin and Senate GOP Leader Christine Radogno, with some complaining that the city is still partially deferring rather than immediately meeting its obligation.
Rauner’s office today declined to comment on what he will do with the bill and whether he considers it a hostage of sorts in continuing clashes with Democrats over the state budget and other issues.
But Madigan spokesman Steve Brown said Rauner “tried to beat” the bill. The governor “wants to stop everything now, so he can say in his TV ads that nothing is happening.”
Democrats can deny Rauner the chance to veto the bill by failing to send it to him. Indeed, Brown says he suspects that may happen–Rauner needs time to “cool down,” Brown said. Cullerton has filed a motion to reconsider the bill, which places a temporary brick on it. […]
Another complication: By some accounts, the same bill had been expected to offer similar deferred payment options to downstate pension plans that cover police and firefighters. But that clause was eliminated from the bill and may need to be revived to get Rauner’s support.
Rauner couldn’t beat the bill. But he did keep his GOP members off of it, showing that he is either opposed in principle or at least opposed to passage before he gets his own agenda completed.
And that Downstate language problem may be only part of the issue.
* From a radio interview with the governor today…
Bruce Rauner says the Chicago police & fire pension bill kicks the can down the road on @WBEZmorning
"I'm so disappointed in the mayor"
— Tony Arnold (@tonyjarnold) June 1, 2015
posted by Rich Miller
Monday, Jun 1, 15 @ 1:11 pm
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Sonny, why pick a public fight with Rahm?
Aren’t your hands full with MJM, Cullerton, and the Unions?
In the End, Sonny, going to the mattresses with everyone won’t end well…
…unless you’re all “friends”, although talking to your friends as Sonny does, who’d trust you?
Comment by Oswego Willy Monday, Jun 1, 15 @ 1:17 pm
For downstate, he could AV the bill. However, it looks like Rauner’s set in his my way or highway mode.
Comment by Norseman Monday, Jun 1, 15 @ 1:20 pm
Stopping everything has been the plan since before the election, hasn’t it?
Comment by Macbeth Monday, Jun 1, 15 @ 1:20 pm
Maybe Rauner believes his friendship with Rahm will endure despite this business stuff. But I think he will see that these “lifetime politicians” take their business very personally.
Comment by siriusly Monday, Jun 1, 15 @ 1:21 pm
Smokes getting thick from all the burnt bridges.
Comment by Anonymous Monday, Jun 1, 15 @ 1:22 pm
I still don’t see how agreeing to a 100% increase in funding in year 1 and then an additional 50% within 2 years is considered kicking the can down the road? I don’t think he knows what that phrase means.
Comment by PMcP Monday, Jun 1, 15 @ 1:24 pm
Everyday that Governor Rauner fails to find common ground within state government is another day that he makes government worse. One of his excuses since his inauguration has been that he didn’t make the messes he found.
After January of this year, he owns it when he goes out of his way to avoid fixing it. This governor cannot seem to compromise even when it is best for everyone.
If he continues to believe that exacerbating our fiscal crisis is somehow good for anyone - he couldn’t be more incorrect. His bad policies are costing taxpayers millions.
He continues to fail to understand that subtraction in government requires more difficult math than addition in government. Bruce Rauner is costing us a fortune - and he doesn’t even seem to know it!
…and we thought Blagojevich was bad…
Comment by VanillaMan Monday, Jun 1, 15 @ 1:30 pm
Well the eternal fog seems to thicken by the day
Comment by bluegrass boy Monday, Jun 1, 15 @ 1:35 pm
I think everything is on hold until the media buy is completed.
Comment by Wordslinger Monday, Jun 1, 15 @ 1:39 pm
The bonds are already responding in a positive way, and the bill has yet to become law. That’s very good. We need our credit ratings to rise away from the danger zone. I hope the leaders can work out any kinks and pass this bill.
Comment by Grandson of Man Monday, Jun 1, 15 @ 1:49 pm
So the Governor wants to freeze Chicago property taxes. He said during his budget address that he doesn’t believe any changes should be made to police or fire pensions. Then he criticizes this bill as kicking the can down the road. Is the Governor even capable of coming up with any kind of solution that involves math and is works?
Comment by Juice Monday, Jun 1, 15 @ 1:55 pm
We don’t need no education
We don’t need no Liquor Control (Commisssion)
No dark sarcasm in the comments
Leaders leave us kids alone
Hey, Governor, leave us kids alone
All in all, it’s just a budget trick on us all
All in all, they’re playing another trick on us all.
Comment by 47th Ward Monday, Jun 1, 15 @ 2:10 pm
It seems Rauner believes that, in politics, it’s OK to Diss your friends in public.
“It’s not personal. It’s only bidness.”
Bruce, you’ve made it personal.
There will never be any going back.
You don’t own Rahm, regardless of how many millions you helped him make.
You don’t own anyone but your feeble GOP legislators.
Comment by Austin Blvd Monday, Jun 1, 15 @ 2:14 pm
=== It kicks the can down the road. ===
Let’s hope the governor remembers that principle when he is tempted to defer some funding of the state pension system.
Comment by nona Monday, Jun 1, 15 @ 2:26 pm
I one day change in bond yields means little, if anything at all, about the long term prospects of Chicago’s financial problems.
Comment by Apocalypse Now Monday, Jun 1, 15 @ 3:20 pm
“I’m so disappointed in the mayor” …Really? I can’t with this guy’s ego. His lack of diplomacy and professionalism is disappointing.
Comment by Politix Monday, Jun 1, 15 @ 3:26 pm
Come on Democrats, tax pensions and empty the state out. We could be like Detroit, but a state…..
Comment by What is to be done? Monday, Jun 1, 15 @ 3:44 pm