Courtesy of Mish.
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 by Mark Glennon
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.
