Chicago Board of Education

Chicago Police Department Manpower Shortage Latest

“Chicago readers take note: The ‘thin blue line’ that exists in the Windy City will likely remain that way for the foreseeable future. Carry on accordingly.”

Survival And Prosperity, October 3, 2011

With the help of the popular Chicago police blog Second City Cop, I became aware several years ago of the manpower shortage going on in the Chicago Police Department.

Subsequently, I started blogging about the situation from time to time.

As shootings in the city march past 2,300 for the year, attention is being drawn to Chicago’s “cop shortage” again. Fran Spielman reported on the Chicago Sun-Times website on July 20:

After three shootings this week in a gang-ridden South Side ward that includes Englewood and Back of the Yards, Ald. Ray Lopez (15th) is demanding that Emanuel finally make good on his 2011 campaign promise to hire 1,000 additional police officers.

In the meantime, Lopez wants Chicago Police officers now working in pairs for their own safety to get reinforcements from the Illinois National Guard, the Illinois State Police, the Cook County Sheriff’s office or all of the above

(Editor’s note: Bold added for emphasis)

No DHS or other federal agencies?

On the subject of paying for more police, Alderman Lopez brought up taxes. Spielman added:

When Lopez was asked where he would find the money to hire 1,000 more police officers, he offered to raise property taxes- again.

That’s on top of the $588 million property tax increase approved last fall for police and fire pensions and school construction and the $250 million increase the Board of Education is about to approve for teacher pensions…

Remember what I’ve been saying for years now about new/higher fees, fines, and taxes for Chicagoans?

With news yesterday that the Fraternal Order of Police is urging its members to turn down all requests for “non-mandatory overtime” over the fast-approaching Labor Day weekend, Second City Cop blogged:

It is most certainly is a message to the administration- “Hire more cops!” seems to be what we’re reading. And that’s a perfectly appropriate message to be sending to the city- the Department is badly understaffed

(Editor’s note: Bold added for emphasis)

It will be interesting to see how this all plays out.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Sources:

Spielman, Fran. “Shooting of 6-year-old girl revives demand for 1,000 more cops.” Chicago Sun-Times. 20 July 2016. (http://chicago.suntimes.com/news/shooting-of-six-year-old-resurrects-demands-for-1000-more-cops/). 26 July 2016.

SCC. “OT Boycott Gets Media Coverage.” Second City Cop. 26 July 2016. (http://secondcitycop.blogspot.com/2016/07/ot-boycott-gets-media-coverage.html). 26 July 2016.

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Chicago’s Financial Reckoning Day Has Arrived

Chicago readers of Survival And Prosperity were warned that the City of Chicago’s poor financial health would result in a sustained hunt for much more revenue (new and higher fees/fines/taxes) for the foreseeable future.

The warnings were constant, and issued over the last couple of years.

So the following headlines on the websites of the two major local papers should not have come as a surprise to the courageous Chicagoans who’ve continued to read this blog on a regular basis despite the steady barrage of depressing news coming out of the “Windy City” lately.

“Emanuel to seek $500 million property tax hike”
Chicago Sun-Times website, September 2, 2015

“Emanuel set to call for largest property tax hike in modern Chicago history”
Chicago Tribune website, September 3, 2015

By the looks of things, Chicago’s financial reckoning day has arrived.

Time to pay the taxman.

Hal Dardick and Bill Ruthhart reported on the Tribune website this morning:

Mayor Rahm Emanuel is set to call for the largest property tax increase in modern Chicago history to raise enough money to make a major pension payment for police and firefighters next year, the mayor’s City Council floor leader and a City Hall source told the Chicago Tribune late Wednesday.

The mayor also plans to push a new garbage collection tax, a new per-ride fee on taxis and ride-hailing services such as Uber and a new tax on electronic cigarettes and smokeless tobacco products…

(Editor’s note: Bold added for emphasis)

The Chicago Sun-Times’ Fran Spielman broke all this down brilliantly last night. The City Hall Reporter wrote:

Sources said the 2016 budget that Emanuel will present to the City Council on Sept. 22 will include a $450 million property tax increase for police and fire pensions the mayor once hoped to shore up with revenues from an elusive Chicago casino.

In addition, Emanuel will ask aldermen to adopt a separate levy of $50 million to bankroll school construction and pay off old projects…

Emanuel has offered to raise property taxes by an additional $170 million for the schools, but only if teachers accept the equivalent of a 7 percent pay cut and the state reimburses CPS for “normal” pension costs…

Together, the increases for both the city and CPS have the potential to raise the annual property tax bill for the owner of a home valued at $250,000 by nearly $700.

(Editor’s note: Bold added for emphasis)

“Home valued at $250,000 by nearly $700.”

Holy crap. That’s some pretty serious coin.


PSA from Alderman Al Czervik, Chicago City Council
YouTube Video

Keep in mind this hit to Chicago property owners doesn’t account for that other recent property tax hike I wrote about on August 27:

There are so many new and increased fees, fines, and taxes being proposed and implemented around the Chicagoland area these days, it’s hard to keep track of all of them. But here’s one Chicago tax hike that’s just been approved that’s making local headlines. Juan Perez, Jr., reported on the Chicago Tribune website last night:

Mayor Rahm Emanuel’s school board on Wednesday unanimously approved a budget that relies heavily on borrowed money and the hope of a nearly $500 million bailout from a stalemated Springfield, with the specter of disruptive cuts in January if that help fails to materialize.

The $5.7 billion spending plan contains another property tax hike — an estimated $19-a-year increase for the owner of a $250,000 home — as well as teacher and staff layoffs. The Chicago Board of Education also prepared to go to Wall Street to issue $1 billion in bonds and agreed to spend $475,000 so an accounting firm can monitor a cash flow problem so acute that Chicago Public Schools mulled skipping a massive teacher pension payment at the end of June…

(Editor’s note: Bold added for emphasis)

So there it is. And if Chicagoans think this major tax increase is some sort of one-off, well, I know of a certain bridge for sale out east. Like I’ve been warning all along, emphasizing it as recent as August 21:

New/higher fees, fines, and taxes, coupled with reduced government services

I also added in that post:

Chicago readers of this blog- what are you planning to do about the crisis? Or, what are you already doing? Maybe you don’t think a crisis exists? Please share your thoughts or experiences in the “Comments” section of this post, as I’d really like to talk more about this going forward.

Not much of a response was received (save for Mihail- thanks buddy). Anyone care to chime in now? Vent a little perhaps? Keep it civil, of course.

One more thing. With the cat out of the bag concerning the property tax hike and renewed attention on Chicago’s fiscal issues, I wonder what the impact will be on Chicago’s housing market (which had some positive momentum) going forward?

Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Sources:

Dardick, Hal and Ruthhart, Bill. “Emanuel set to call for largest property tax hike in modern Chicago history.” Chicago Tribune. 3 Sep. 2015. (http://www.chicagotribune.com/news/local/politics/ct-rahm-emanuel-property-tax-hike-met-0903-20150902-story.html). 3 Sep. 2015.

Spielman, Fran. “Emanuel to seek $500 million property tax hike.” Chicago Sun-Times. 2 Sep. 2015. (http://chicago.suntimes.com/news/7/71/928338/emanuel-seek-500-million-property-tax-hike). 3 Sep. 2015.

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Chicago Property Taxes Hiked As School Budget Passed

There are so many new and increased fees, fines, and taxes being proposed and implemented around the Chicagoland area these days, it’s hard to keep track of all of them. But here’s one Chicago tax hike that’s just been approved that’s making local headlines. Juan Perez, Jr., reported on the Chicago Tribune website last night:

Mayor Rahm Emanuel’s school board on Wednesday unanimously approved a budget that relies heavily on borrowed money and the hope of a nearly $500 million bailout from a stalemated Springfield, with the specter of disruptive cuts in January if that help fails to materialize.

The $5.7 billion spending plan contains another property tax hike — an estimated $19-a-year increase for the owner of a $250,000 home — as well as teacher and staff layoffs. The Chicago Board of Education also prepared to go to Wall Street to issue $1 billion in bonds and agreed to spend $475,000 so an accounting firm can monitor a cash flow problem so acute that Chicago Public Schools mulled skipping a massive teacher pension payment at the end of June…

(Editor’s note: Bold added for emphasis)

My old neighbors on the city’s Northwest Side, in their single family homes that are selling just south of the $350K-mark on average these days, probably aren’t too thrilled to hear about this latest tax hike.

Oh, but it gets “better.” Perez added:

To help patch over a budget gap the district said exceeds $1.1 billion, CPS raised its property taxes to the maximum amount allowed under state law. But CPS may not be done — [Chicago Public Schools chief Forrest] Claypool has floated the idea of restoring a property tax levy dedicated to teacher pensions that would generate an estimated $170 million

(Editor’s note: Bold added for emphasis)

Keep in mind this is just the school’s portion of the Chicago property owner’s tax bill we’re talking about here.

Once again, a couple of bucks here, a couple of bucks there, and all these new and increased fees, fines, and taxes from various levels of government will have Chicago taxpayers going bonkers soon enough.

And Illinois taxpayers- note that bit about:

The hope of a nearly $500 million bailout from a stalemated Springfield…

You too could be on the hook for this debacle.

Head on over to the Chicago Tribune website here to get the full story on this latest tax hike.

Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

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Crain’s Chicago Business: Pension Reform Ruling Could Cost Taxpayers Extra $200 Million A Year Through End Of Decade

In my Sunday post about Chicago’s pension reform legislation being ruled unconstitutional, I blogged:

Chicagoans- let that last line from Dardick and Pearson sink in real good:

“Taxpayers could eventually be on the hook for hundreds of millions of dollars more in annual payments to those city funds — before the even worse-funded police and fire retirement accounts are factored into the taxing equation…”

How many hundreds of millions are we talking about here?

Greg Hinz wrote in his blog on the Crain’s Chicago Business website Monday:

The court decision throwing out a deal to refinance two Chicago pension funds appears to be among the most costly in the city’s history, in some ways ranking right up there with the Great Chicago Fire.

Exact figures are not available and vary some depending on who’s doing the estimating. But based on statements by city officials and documents filed by the pension funds themselves, it’s likely that the decision by Cook County Circuit Court Judge Rita Novak will cost city taxpayers around $200 million a year through the end of the decade—and will keep rising for decades thereafter.

“You’d have to go back to either the Depression or the Great Fire to find a comparable situation in which the city faced either greater challenges or more painful decisions,” Civic Federation President Laurence Msall said. “It’s clearly going to result in increased taxes and reduced services.”

(Editor’s note: Bold added for emphasis)

Remember, that additional $200 million hit to Chicago taxpayers would come on top of addressing fire and police pensions. And bailing out the Chicago Public Schools, which had its credit rating reduced to junk status today by Fitch Ratings. In May, I noted Moody’s downgraded the Chicago Board of Education (the primary debt issuers of CPS) three notches to junk.

You can read Hinz’s entire blog post on the Crain’s Chicago Business website here. If I were still a Chicago resident, I’d probably find it disturbing. But at least I’d be clued in as to what could be coming down the line.

Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

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Chicago Board Of Education Authorizes Another Billion Dollars Of Debt

On June 24, I blogged about the Chicago Board of Education approving plans to borrow more than $1 billion to meet its financial obligations .

And then I found out the Board of Education was seeking yet another cool billion to help pay the bills. Lauren Fitzpatrick reported on the Chicago Sun-Times website yesterday:

Chicago’s newly constituted Board of Education voted unanimously Wednesday to authorize up to $1.2 billion in long-term bonds so the district can pay for ongoing capital projects, fees on past borrowing and some costs of refinancing old debt.

That’s on top of the $1.1 billion the board approved last month in short-term lines of credit — and it won’t stave off about $200 million in cuts and 1,000-plus layoffs the district already announced

(Editor’s note: Bold added for emphasis)

All this brought to mind the lyrics of an Aerosmith song my buddies and I used to listen to back in high school:

It’s the same old story, same old song and dance, my friend…

Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Source:

Fitzpatrick, Lauren. “Chicago Board of Ed votes to approve $1.2 billion in borrowing.” Chicago Sun-Times. 22 July 2015. (http://chicago.suntimes.com/news/7/71/814622/cps-seeks-permission-borrow-1-2-billion). 23 July 2015.

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Thursday, July 23rd, 2015 Debt Crisis, Education No Comments

Chicago Board Of Education Could Borrow More Than $1 Billion With $600 Million-Plus Pension Payment Due Next Week

I fear Chicago’s celebratory mood post-Stanley Cup could be fast disappearing as the city’s financial reckoning day rapidly approaches. Juan Perez, Jr., reported on the Chicago Tribune website tonight:

The Chicago Board of Education on Wednesday approved plans to borrow more than $1 billion in an effort to manage an immediate cash crunch and get through the coming budget year.

The borrowing is on top of an existing line of credit of up to $500 million. The initial $200 million in borrowing authorized Wednesday could help the district cover its bills through the end of June, but the district would be short of cash to cover payments shortly after that, according to documents obtained by the Tribune.

A separate line of credit of up to $935 million would take the district through the coming budget year. The loans will be secured with the promise of future property tax revenue.

The board’s unanimous 5-0 vote in favor additional borrowing came one day after the Illinois House fell 18 votes short of approving a three-week extension on a $600 million-plus pension payment due next week

(Editor’s note: Bold added for emphasis)

Democrats have a supermajority in both chambers of the Illinois General Assembly, and “Machine”-controlled Chicago still couldn’t get that pension payment deadline extended.

Oh well. Long-time Survival And Prosperity readers shouldn’t be the least bit surprised about the latest bad news concerning Chicago’s public schools. I blogged way back on September 13, 2012:

By now, many of you have probably heard about the teachers strike going on in Chicago. Day 4 and counting. While many Chicago public school teachers are probably worth every red cent of the $71,017 median salary they command- and more- when all things are considered, considering the precarious financial situation of the Chicago Public Schools, a larger crisis looks to be right around the corner.

Looks like we’re almost there.

Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Source:

Perez, Juan. “Chicago school board approves more than $1 billion in new borrowing.” Chicago Tribune. 24 June 2015. (http://www.chicagotribune.com/news/local/breaking/ct-school-board-meets-met-0625-20150624-story.html). 24 June 2015.

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Chicago’s Credit Rating Lowered By Fitch Ratings, Moody’s, Standard & Poor’s

The three major U.S. credit rating agencies have downgraded the City of Chicago this past week. Last Tuesday, Moody’s announced on its website:

Rating Action: Moody’s downgrades Chicago, IL to Ba1, affecting $8.9B of GO, sales, and motor fuel tax debt; outlook negative

Also downgrades senior and second lien water bonds to Baa1 and Baa2 and downgrades senior and second lien sewer bonds to Baa2 and Baa3, affecting $3.8B; outlook negative

New York, May 12, 2015 — Moody’s Investors Service has downgraded to Ba1 from Baa2 the rating on the City of Chicago, IL’s $8.1 billion of outstanding general obligation (GO) debt; $542 million of outstanding sales tax revenue debt; and $268 million of outstanding and authorized motor fuel tax revenue debt…

In case readers didn’t notice, that was a two-notch downgrade from “Baa2” to “Ba1.”

According to Moody’s “US Municipal Ratings,” “Ba” indicates “Issuers or issues rated Ba demonstrate below-average creditworthiness relative to other US municipal or tax-exempt issuers or issues.”

In other words, “junk.”

A day later, Moody’s was at it again, lowering the Chicago Board of Education’s credit rating. From their site on May 13:

Moody’s downgrades Chicago Board of Education, IL’s GO to Ba3; outlook negative

Ba3 rating applies to $6.2 billion of GO debt

New York, May 13, 2015 — Moody’s Investors Service has downgraded to Ba3 from Baa3 the rating on the Chicago Board of Education, IL’s $6.2 billion of outstanding general obligation (GO) debt. The Chicago Board of Education is the primary debt issuer for the Chicago Public Schools (CPS) (the district). The outlook remains negative…

A three-notch downgrade. And even worse “junk.”

Standard & Poor’s joined in on the downgrade parade later in the week. From a press release Friday:

Chicago, IL GO Bond Ratings Lowered To #A-# From #A+#, Placed On CreditWatch Due To Short-Term Liquidity Pressure

CHICAGO–15 May–Standard & Poor’s

CHICAGO (Standard & Poor’s) May 14, 2015–Standard & Poor’s Ratings Services lowered its rating to ‘A-‘ from ‘A+’ on the city of Chicago’s outstanding general obligation (GO) bonds, and placed the ratings on CreditWatch with negative implications…

According to the S&P website, “A” indicates:

Somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher-rated categories. However, the obligor’s capacity to meet its financial commitment on the obligation is still strong.

Fitch Ratings was the last of the three major credit rating agencies to the party, releasing the following Friday on their website:

Fitch Downgrades Chicago, IL’s ULTGOs and Sales Tax Bonds to ‘BBB+’; Ratings on Negative Watch

Fitch Ratings-New York-15 May 2015: Fitch Ratings has downgraded the ratings on the following Chicago, Illinois obligations:

–$8.1 billion unlimited tax GO bonds to ‘BBB+’ from ‘A-‘;
–$546.5 million (accreted value) sales tax bonds to ‘BBB+’ from ‘A-‘;
–$200 million commercial paper notes, 2002 program series A (tax exempt) and B (taxable) bank bond ratings to ‘BBB’ from ‘BBB+’.

At the same time, the ratings have been placed on Negative Watch…

According to the Fitch Ratings website, “BBB” indicates:

Expectations of default risk are currently low. The capacity for payment of financial commitments is considered adequate but adverse business or economic conditions are more likely to impair this capacity.

You can read the May 12 Moody’s press release on their website here. The May 13 Moody’s release is here. Standard & Poor’s press release can be found here (on thailand4.com) and the Fitch Ratings release on their website here.

Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

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Survival And Prosperity
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