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Moody’s Investors Service Wednesday downgraded the City of Evanston’s general obligation bond rating to Aa2 from Aa1.

The agency said the downgrade reflects a multi-year erosion in city reserves and growing unfunded pension liabilities.

It said that balancing those ongoing pressures were the city’s sizable tax base, revenue raising flexibility, still sound reserve levels and strong economic profile anchored by Northwestern University, which has an Aaa stable rating.

Lower bond ratings lead to higher interest charges on bonds, which creates added burdens on local taxpayers.

Moody’s said that two factors could lead to an upgrade of the city’s rating — reduction in the city’s debt and pension burden or sustained strengthening in financial operations leading to significant growth in reserves and liquidity.

By contrast, further declines in operating reserves or increases in debt levels or pension liabilities could lead to a further downgrade.

Evanston had had the rating agency’s highest, Aaa, rating until a downgrade in 2007 to Aa1. It then regained the Aaa rating in 2010, and was cut back to Aa1 in 2013.

The city is scheduled to issue $22 million in bonds, partly to refinance existing debt, next week.


Update 7:45 a.m.: Contacted this morning, the city’s chief financial officer, Marty Lyons, said he’d have a statement responding to the action by Moody’s later today.

Bill Smith is the editor and publisher of Evanston Now.

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11 Comments

  1. Moody Bond Downgrade
    Apply the revenue from the transfer station to pay down the pensions. We have a long way to go, but the best way to get ahead of a debt is to increase the payments whenever you can.

    1. Upgrade

      Better yet, include the 23% increase in the approved aldermatic raises in the discretionary income of the transfer fund. I am sure they will work hard to justify the increase (as if the taxpayers have no say to approve such expense).  

      1. Insignificant

        Even if the 23% increase in aldermanic raises was approved, the total dollar increase would have an insignificant impact on the City's budget. 

        We should focus our time and attention on the issues that really have an impact.

        Else our taxes will continue to go higher and higher. Just ask anyone who owns real estate in the City of Chicago what recently happened to their tax bill…and it's just the beginning.

        1. It’s the principle of the raise
          Except for Miller and Revelle, you would be fired if you had the track record of the mayor and the rest of the city council for the last 8 years. Should there be a raise? NO! Should they drop free health care for the part-time elected officials? YES

        2. It adds up

          To paraphrase Dirksen, 23% here, 23% there, and pretty soon your talking real money.

          The Council keeps divving out money claiiming it is small and won't effect anything. Well it does and the taxpayers pay for it.  Time to cut the size of the Council and get rid of either the city manager or mayor [cerimonial anyway]. I note they don't offer to pay for any of these things themselves.  How much out of their wallet have they give for Mansion repairs ?  Crown Center ? Arts buildings ? Deficit from former arts builiding? Or any of the other "pet projects" they lay on the rest of the taxpayers ?

  2. Info on Evanston Pension Funds

    The current stated unfunded pension liability is $193 million just for the City of Evanston's Police and Fire Pension Funds. This figure does not include other City employees which are covered by a different pension plan, Illinois Municipal Retirement Fund (IMRF). For context the unfunded pension liability for Police and Fire Pension Funds 10 years ago was just over $90 million.

    You can get the information from the City's website:

    http://www.cityofevanston.org/transparency/pensions/

    Page 9 for both reports shows the unfunded liability.

    Police = $105,403,401

    Fire = $83,032,054

    Here's the link to the IMRF website : https://www.imrf.org/

     

  3. Time for voters to do a major house cleaning

    The government union pension is an unsustainable trainwreck coming to a town near you.

    Our elected officials didn't help when they created an unneccesary 311 system with an additional two dozen more government union employees. That means more pension payments. 

    Illinois, Cook County ,Chicago and even Evanston are tangled in a death spiral of rising government union pension debt, higher property, income and sales taxes and less business growth as companies either move out or decide not to move in Illinois.

    Don't forget that Democrats in 2010 during the throes of a great rececession raised our state income taxes 67 percent. 

    We need new leadership. We need fiscal conservatives running Evanston, Cook County, Chicago and especially Illinois.

     

    1. 311

      I think the 311 system is great.  It allows me to communicate with the city easily and effectively.  I have used it numerous times when I am not sure of who I should call about an issue.  This includes everything from rats, sidewalk replacement, power outage, etc.  The staff are professional, helpful and polite.   It is definitely worth money. 

       

      1. Love 311
        The time before 311 was filled with calls to aldermen who rarely called back. With 311, there is accountability. If we want to get rid of a few pensions, fire the aldermen and keep 311. A handful of volunteers could do the job of our aldermen much better. Our aldermen are happy to have 311 because they never have to hear from us. As for the 23% pay hike…. 311 has taken a huge burden off of them because they no longer have to deal with Evanston citizens calling them with our issues. The oft repeated refrain touting how hard they work for us no longer holds water. They need to get a new byline to account for just why a 23% pay raise is acceptable, no matter how little it impacts our entire budget. I also agree with a previous poster – as part time employees they should not be given benefits. Not one other City of Evanston part time employee receives benefits and it is ridiculous that they are benefiting, but other employees are not.

        1. No pensions

          Hi Che-Li,

          While aldermen do qualify for health benefits, they are not eligible for city pensions.

          — Bill

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