CHICAGO Oct 7 Chicago's recent enactment of a
tax to save its biggest pension fund from insolvency won the
city a stable outlook for its credit rating from S&P Global
Ratings on Friday.
While affirming a BBB-plus rating for Chicago's general
obligation bonds, S&P revised the outlook to stable from
Last month, the Chicago City Council approved a tax on water
and sewer usage that is projected to raise about $240 million a
year once fully phased in over five years. The revenue will help
Chicago gradually increase contributions to its municipal
retirement system, which is on track to run out of cash within
"We view this as a positive step to address the city's
underfunded pensions," said S&P analyst Helen Samuelson in a
Credit ratings for the nation's third-largest city have been
deteriorating due largely to an unfunded pension liability that
stood at $33.8 billion at the end of fiscal 2015 for Chicago's
four retirement systems.
Chicago has also authorized a phased-in $543 million
property tax for its police and fire retirement systems and a
telephone surcharge increase for its laborers' pension fund.
The city's action to patch up its pensions led to an outlook
revision to stable from negative in August from Fitch Ratings,
which rates Chicago's $9.2 billion of GO bonds BBB-minus.
Moody's Investors Service still has a negative
outlook on its Ba1 junk rating for Chicago.
(Reporting by Karen Pierog; Editing by Matthew Lewis)