NEW YORK--(BUSINESS WIRE)--Kroll Bond Rating Agency Comments on City of Chicago Fiscal Year 2016 Budget Adoption. On October 28, 2015, the Chicago City Council adopted the proposed 2016 fiscal year Budget with only minor revisions that Kroll Bond Rating Agency (KBRA) considers non-substantive. Budget passage was by a 35 to 15 vote, while the revenue package that supports the Budget was approved 36 to 14. While the spending plan passed easily, opposing votes were at the highest level for any proposed Budget under the current administration. KBRA believes the increased council opposition reflects the magnitude of the phased-in property tax levy increase ($543 million for the City, $45 million for Chicago Public Schools), which is unprecedented.
As KBRA has previously commented (please see Kroll Bond Rating Agency Comments on City of Chicago, IL Proposed Fiscal Year 2016 Budget, dated October 6, 2015), the Budget represents clear progress in confronting the challenges of unfunded pension liabilities, and addressing future structural deficits. While KBRA looks favorably on Budget adoption, we believe that the Budget contains certain assumptions that rely upon State legislative action, and judicial determination. In the absence of favorable disposition of these issues for the City, budgetary revisions will likely be necessary, and assumed funding costs may rise sharply. The adequacy of pension funding remains a major challenge for the City. KBRA will continue to monitor and comment on issues relevant to the City’s general credit, as appropriate.
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KBRA is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (NRSRO). In addition, KBRA is recognized by the National Association of Insurance Commissioners (NAIC) as a Credit Rating Provider (CRP).
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