Standard & Poor’s lowers city’s outlook to ‘negative’

Chicago’s looming pension crisis — and the $1 billion shortfall it creates in 2015 — has prompted Standard & Poor’s to change from stable to negative the outlook on Chicago’s A-plus general obligation bond rating.

In mid-July, Moody’s Investors ordered an unprecedented triple-drop in the city’s bond rating, citing Chicago’s “very large and growing” pension liabilities, “significant” debt service payments, “unrelenting public safety demands” and historic reluctance to raise local taxes that has continued under Mayor Rahm Emanuel.

Now, Standard & Poor’s has cited those same factors for its negative outlook on Chicago’s A-plus rating.

“The outlook change reflects our view of the risks involved in how the city will address its upcoming large pension payments,” S&P said.

Like Moody’s, Standard & Poor’s cited Chicago’s $19.4 billion pension crisis, the city’s mountain of debt, and its historic “reluctance to adjust taxes” despite its sweeping home-rule powers and diverse economy.

Emanuel took the latest Wall Street hit in stride by essentially saying, “I told you so” about the city’s financial cliff.

“Mayor Emanuel has said for more than a year that without comprehensive pension relief from Spring- field, municipalities such as Chicago would continue to receive negative reviews from rating agencies,” Kelley Quinn, a spokesperson for the city’s Office of Budget and Management, said in an emailed statement.

“We have made significant strides over the past two years, but all of the hard work will be for nothing without pension reform. [Emanuel] urges leaders in Springfield to come together and find a common ground that will provide the muchneeded relief that will give taxpayers, retirees, residents and rating agencies confidence in Chicago’s finances as well as its future.”