Friday, July 27, 2012
Chicago Tribune
by Hal Dardick

There’s mixed news as Cook County prepares to borrow money: one bond-rating agency assigned a negative outlook to outstanding debt, largely because of growing unfunded pension liabilities, while another service gave the proposed bond issue a high rating.

The upshot, following an early analysis, is that the differing reviews won’t add taxpayer costs to borrowing $100 million for road work, said Owen Kilmer, a spokesman for County Board President Toni Preckwinkle.

But county officials view it as a sign that state legislative action is needed to address the county’s $4.7 billion unfunded pension tab. “This is a tell-tale sign of what happens when we have inaction on pension reform,” Kilmer said.

Commissioner Bridget Gainer, D-Chicago, who heads up a committee addressing the pension issue, agreed more work needs to be done, both at the state and county level. “There has been a lot of talk about it, and there hasn’t been a lot of action,” she said.

Lawmakers have been gridlocked on a pension fix for state government, and that means no solution has been passed for county or city government either.

In a written statement, Preckwinkle urged “all parties involved in this process to return to the negotiating table to produce a comprehensive pension reform solution.”
Moody’s maintained its Aa3 rating for the county’s debt, but changed the outlook from stable to negative, citing the unfunded pension liabilities, money issues at the county’s vast public health care system and Preckwinkle’s plan to kill off the last quarter-cent-on-the-dollar of her predecessor’s sales-tax increase.

But Standard & Poor’s gave the proposed bond issue for road work an initial AAA rating with a stable outlook, the best rating in years for county borrowing, Kilmer said. Fitch Ratings maintained the Aa3 debt rating with a stable outlook.

Kilmer attributed the higher Standard & Poor’s rating for the impending bond issue to the fact that debt will be backed by sales taxes, rather than gas taxes. Sales taxes are viewed as more stable.