Example_PBGC_News_Clips.pdf

PBGC News Clips 9/3/15

INDEX

PBGC

Fed Agency to Oversee Standard Register Pensions Printing Impressions - 9/2/15 by Erik Cagle "...The Stanreco Plan and the 8,500 current and future retirees of the bankrupt company will now fall under the guidance of Pension Benefit Guaranty (PBGC)...."

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MULTIEMPLOYER PLANS

IRS outlines procedures for benefit cuts by troubled multiemployer pension plans Business Insurance - 9/2/15 by Jerry Geisel "...However, even if participants reject the cuts, the U.S. Treasury Department can override the vote, permitting the implementation of a benefits suspension plan if a plan is "systemically important" - meaning it poses a very large risk to the Pension Benefit Guaranty Corp., the federal agency that guarantees a portion of participants' promised benefits...."

PENSIONS/RETIREMENT

Moody's: IRS Mortality Decision To Save Corporate Pensions $18B in 2016 Wall Street Journal - 9/3/15 by Vipal Monga "...The Internal Revenue Service's decision in July to delay until 2017 the use of new mortality assumptions for calculating corporate pension obligations could save companies a combined $18 billion in 2016, according to Moody's Investors Service...."

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How to Play 'Retirement Catch-Up' If You Had a Late Start Huffington Post - 9/2/15 by Paula Pant "...You 've celebrated your 40th birthday (or better). Now that you 're older and wiser, you decide to start learning about retirement planning. You assume you still have plenty of time. After all, retirement is more than a decade away. You start reading..."

BANKRUPTCY

Puerto Rico's PREPA reaches deal with bondholder group Reuters - 9/2/15 http://www.piworld.com/article/federal-firm-assumes-control-standard-register-pension-pan/ http://www.businessinsurance.com/article/20150902/NEWS03/150909938?CSAuthResp=1%3A773584382358098%3A109186%3A64%3A24%3Aapproved%3A7BB0CEDC4C04448E5F1BB3C1EB2DF18D&= http://blogs.wsj.com/cfo/2015/09/02/moodys-irs-mortality-decision-to-save-corporate-pensions-18b-in-2016/ http://feeds.huffingtonpost.com/c/35496/f/677045/s/4984be05/sc/15/l/0L0Shuffingtonpost0N0Cwiseradvisorcom0Chow0Eto0Eplay0Eretirement0Eca0Ib0I80A70A6380Bhtml/story01.htm by Megan Davies "...It marked the most notable default in the U.S. $3.7 trillion municipal bonds market since Detroit defaulted on $1.45 billion of insured pension bonds before filing for bankruptcy in 2013...."

GOVERNMENT PLANS

Pension fund weighs shift to safety Los Angeles Times - 9/3/15 by Dean Starkman and Melody Petersen "...The California State Teachers' Retirement System, the nation's second-largest public pension system, is considering a new strategy that would shift up to 12% of its $191-billion portfolio into safer investments, such as long-term Treasury bonds...."

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Chicago Faces Reckoning as Deficit Pressure Builds for Emanuel Bloomberg - 9/2/15 by Elizabeth Campbell "..."We have a budget deficit and then pension payments," Emanuel, a Democrat, said at the end of the meeting Monday at Malcolm X College...."

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PBGC

Fed Agency to Oversee Standard Register Pensions Printing Impressions - 9/2/15 by Erik Cagle

The underfunded pension plan for the employees of Standard Register has been taken over by a federal agency, according to a report in the Dayton Business Journal.

The Stanreco Plan and the 8,500 current and future retirees of the bankrupt company will now fall under the guidance of Pension Benefit Guaranty (PBGC). That agency estimates the plan was underfunded by $322 million, with $289 million in assets to pay and $611 million in benefit liabilities, the newspaper reported.

Pension Benefit Guaranty is coming to the rescue because Taylor Corp. of North Mankato, Minnesota-which purchased Standard Register's assets in bankruptcy proceedings back in June-is not assuming responsibility for the pension plan, while Standard Register is trying to complete its Chapter 11 process.

Retirees age 65 will be paid the legal limit of $60,136 a year by PBGC, according to the Business Journal. Future retirees can apply for benefits as they become eligible. Current retirees will receive their benefits uninterrupted, but the paper noted that higher-paid retirees will take a substantial hit because they have drawn above the limit.

The Standard Register pension plan ended on Monday.

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MULTIEMPLOYER PLANS

IRS outlines procedures for benefit cuts by troubled multiemployer pension plans Business Insurance - 9/2/15 by Jerry Geisel http://www.reuters.com/article/2015/09/02/usa-puertorico-idUSL1N1180GS20150902 http://www.latimes.com/business/la-fi-calstrs-bonds-20150903-story.html http://www.bloomberg.com/news/articles/2015-09-02/chicago-faces-reckoning-as-deficit-pressure-builds-for-emanuel http://www.piworld.com/article/federal-firm-assumes-control-standard-register-pension-pan/

Newly released regulations the IRS lay out the steps financially troubled multiemployer pension plans must follow when they need to cut participants' benefits in order to survive.

That ability to cut benefits - triggered by numerous warnings from federal agencies that without such authority a chunk of the nation's 1,400 multiemployer plans would fail - is a key provision in legislation Congress passed late last year.

The 2014 law allows participants' benefits to be cut if a plan is projected to become insolvent during a current plan year or any of the next 14 years, or any of the next 19 years if the plan's ratio of inactive participants to active participants exceeds 2-to-1 or if the plan is less than 80% funded.

The law requires the plans to give participants the right to vote on cuts before the benefit reductions can be implemented. However, even if participants reject the cuts, the U.S. Treasury Department can override the vote, permitting the implementation of a benefits suspension plan if a plan is "systemically important" - meaning it poses a very large risk to the Pension Benefit Guaranty Corp., the federal agency that guarantees a portion of participants' promised benefits.

The law left it to federal regulators to lay out procedures for participant votes on proposed benefits, which the IRS did in regulations published in Wednesday's Federal Register.

For example, under those regulations, the Treasury Department is allowed to designate a service provider to handle the vote. For example, multiemployer plans would be required to notify participants that a ballot package on the proposed cuts is being sent to them.

However, service providers - not the plan - designated by the Treasury Department would distribute the ballot packages, tabulate the vote and forward the results to the department.

The Treasury Department, in turn, will then use the information, in consultation with the PBGC and the U.S.

Department of Labor, to determine if the a majority of eligible voters rejected the proposed benefit cuts.

Already, one of the nation's biggest and best-known multiemployer plans, the Teamsters Central States, Southeast & Southwest Areas Pension Plan, said "significant and painful retirement benefit reductions must be considered" in order "to prevent a real risk of a total loss benefits."

At year-end 2014, the plan, which has more than 400,000 participants, had $35 billion in liabilities and just $17.8 billion in assets. The Treasury Department regulations were issued in both temporary and proposed form. That means the regulations are effective immediately, but could be changed after regulators review comments they receive.

PENSIONS/RETIREMENT

Moody's: IRS Mortality Decision To Save Corporate Pensions $18B in 2016 Wall Street Journal - 9/3/15 by Vipal Monga

The Internal Revenue Service's decision in July to delay until 2017 the use of new mortality assumptions for calculating corporate pension obligations could save companies a combined $18 billion in 2016, according to Moody's Investors Service.

Corporations with defined benefit pension plans-those that guarantee set payouts to retirees-must estimate the expected lifespans of the retirees to calculate the amount they owe. In 2014, the Society of Actuaries issued new estimates to reflect the longer lifespans of today's retirees. The average 65-year-old American woman is expected to live 88.8 years, up from 86.4. Men who are 65 are expected to live 86.6 years, up from 84.6.

The new assumptions have increased the estimated pension obligations for companies such as General Motors Co., Verizon Communications Inc., and AT&T Inc., for accounting purposes.

http://www.businessinsurance.com/article/20150902/NEWS03/150909938?CSAuthResp=1%3A773584382358098%3A109186%3A64%3A24%3Aapproved%3A7BB0CEDC4C04448E5F1BB3C1EB2DF18D&=

While the accounting hit can hurt earnings, companies had been waiting for an IRS announcement on longevity to determine how much they actually had to put into their plans for regulatory purposes. Under federal law, companies must keep their plans fully funded. The IRS' mortality assumptions, among other considerations, help determine the annual amounts companies must put into any underfunded plans.

Moody's estimated that pension funding levels are at a combined 78% for the non-financial companies it rates.

That means the value of the assets in those pension plans don't equal the amounts owed.

According to Moody's, the IRS' decision to delay using the latest SOA mortality assumptions until 2017 came as a surprise, and will lower required contributions next year. The ratings service deemed that "a credit positive."

"The dollar impact of this change will be substantial," wrote Moody's analysts. They estimated that the non-financial companies the service rates had an estimated pension obligation of $2.1 trillion, and the use of the new mortality estimates will raise that amount by about $126 billion.

By law, corporations have seven years to close the gap, which puts the annual hit at $18 billion.

The tax agency's decision will also make it cheaper for companies to offer retirees lump sum buyouts, said Moody's.

Companies need to use IRS estimates to determine how much they owe when they offer retirees lump sums, as Motorola Solutions Inc., did last September. That means lump sums offered next year will be cheaper than those offered in 2017, noted Moody's.

How to Play 'Retirement Catch-Up' If You Had a Late Start Huffington Post - 9/2/15 by Paula Pant

You've celebrated your 40th birthday (or better).

Now that you're older and wiser, you decide to start learning about retirement planning. You assume you still have plenty of time. After all, retirement is more than a decade away.

You start reading about retirement planning -- and your stomach churns. Every article and book says that you were supposed to start saving in your 20s. Oops. It's too late for that. You're firmly in the middle of life, and your retirement savings are meager.

How can you catch up, if you've had a late start? Here are a few tips.

#1: Understand How Much You Need

The first step is to understand just how far behind you are. How much money do you need in your portfolio in order to retire with the type of lifestyle you desire?

A fee-only financial advisor can walk you through a personalized calculation. But in the meantime, here's how to approximate the amount:

First, look at your current spending. Do you need $50,000 per year to sustain your lifestyle? $75,000? Or $100,000? This is the best indicator of your retirement spending. You'll shed some of your current expenses in your golden years, like commuting costs and your mortgage payment, but you'll add new expenses like out-of-pocket health costs, in-home assistance and travel.

Next, look at how much money you're on track to receive from Social Security and any pensions or other income sources that you might receive, if applicable. Subtract this from your expenses. The amount leftover is how much your portfolio needs to generate. For example, if you want to live on $70,000 annually and Social Security and pensions will pay $30,000 per year, your portfolio needs to generate $40,000 in annual income.

http://blogs.wsj.com/cfo/2015/09/02/moodys-irs-mortality-decision-to-save-corporate-pensions-18b-in-2016/

Finally, multiply that amount by 25 to get a rough estimate of portfolio size you're aiming to create. To generate $40,000 in annual income, you'll need a $1 million portfolio. This allows you to withdraw 4 percent annually, which is generally considered a safe withdrawal rate.

#2: Make Additional Contributions

Next, make additional contributions so that your portfolio can grow. Increase your savings rate , and use this to make extra retirement contributions.

There are two ways to boost your savings: earning more and spending less. Find ways to both earn extra money (such as through consulting or other side income) and also slash your current expenses.

#3: Use Tax-Advantaged Accounts

Concentrate your retirement contributions into tax-advantaged accounts, such as your 401(k) or 403(b), IRA, and HSA. This allows your money to grow tax-deferred or tax-exempt. Only contribute to taxable accounts once you've exhausted your eligibility to make tax-advantaged contributions.

#4: Work Extra Years

Plan to work for extra years and delay your target retirement date. This poses two benefits: your retirement portfolio has more time to grow, and you won't need to access it for as long.

Bear in mind, however, that not everyone chooses to retire. Many people are forced to retire due to health issues, family care responsibilities, or layoffs. Prioritize boosting your current savings rate, in case you're forced to retire earlier than you'd like.

#5: Repay Debt

Get rid of any current debts that you're carrying, particularly high-interest obligations like credit card debt. This will not only help you save hundreds or thousands on interest payments, it will also reduce your current expenses, giving you the ability to save more money in retirement accounts.

#6: Don't Accept Added Risk

Avoid the temptation to plunge into riskier investments in order to compensate for a late start.

Some people are tempted to invest entirely in stocks and equities, with little-to-no diversification into bonds, in order to capture a potentially higher upside. But this strategy carries significant risk, and the potential downside would be a double-whammy.

Maintain a sensible allocation between stocks, bonds and other asset classes. Keep a diversified portfolio, contribute regularly, and rebalance periodically. If you need help creating a portfolio, use an online asset allocation calculator or talk to a fee-only financial planner.

#7: Prioritize Retirement Over College Savings

This last tip may be a tough pill to swallow, but it's necessary: prioritize your retirement savings over your children's college savings.

There are a few reasons for this. First, your children have the rest of their financial futures ahead of them. You, however, don't have the luxury of time. Your retirement is an urgent priority.

Secondly, your children have more options. They can accept student loans; you cannot take out a loan to buy groceries and keep the lights on.

Finally, the best gift that you can give your children is your own secure financial future. Sure, your children may need to repay student loans, but they at least won't need to worry about supporting Mom and Dad.

Final Thoughts

You can create a secure retirement, despite your late start - but only if you make retirement a priority.

You'll need to make significant contributions to tax-advantaged retirement accounts, invest in a wise and well-diversified manner, and eliminate your debts. Most importantly, you'll need to start today.

BANKRUPTCY

Puerto Rico's PREPA reaches deal with bondholder group Reuters - 9/2/15 by Megan Davies

Puerto Rico's electric power utility PREPA has agreed with a bondholder group to reduce its $9 billion debt, a significant step towards restructuring the obligations of the U.S. territory, although the deal will be classed by credit ratings agencies as another default from the indebted island.

Under the deal with the so-called ad hoc group representing about 35 percent of its bondholders, those creditors would swap their bonds for new notes, receiving 85 percent of their existing bond claims, according to a statement from the utility.

Credit rating agency Standard & Poor's said the deal was a distressed exchange and "we would consider PREPA to be in default if this restructuring were to occur" and would lower the ratings on its outstanding debt to a D. S&P currently rates PREPA's bonds at CC.

Moody's said the announcement of a deal meant "a default in the form of a distressed exchange transaction is likely this year." Moody's currently rates the bonds Caa3.

The deal was reached late Tuesday night according to sources. Bondholders holding around $2.9 billion have agreed to swap and the group believes the deal will also attract the retail base which represents $3.1 billion, according to a source familiar with the situation.

Puerto Rico's Governor, Alejandro Garcia Padilla said Wednesday the deal was the next step towards PREPA getting the liquidity to invest in its infrastructure, which would create jobs and spur economic growth.

"I hope this process - and its outcome - will further confirm our commitment to work collaboratively with our creditors to find satisfactory solutions for them and the people of Puerto Rico and their families."

PREPA bonds rallied broadly on the deal, with bonds due 2028 at around 68 cents, versus 56 cents on Tuesday and bonds due 2019 at around 100 cents from 98 cents on Monday.

"The workout was much better than we expected," said Ben Eiler, managing partner at First Southern Securities in Puerto Rico, which holds PREPA debt. Eiler said that a 15 percent cut was acceptable.

Finding a solution for PREPA had been seen as a critical test for the U.S. territory to overcome political and other challenges in fixing other indebted entities.

In June, Garcia Padilla said that the U.S. territory could not afford to pay its debts, totaling $72 billion, adding that all Puerto Rico's bonds were now negotiable.

On Aug. 1 Puerto Rico defaulted on its debt by paying only a fraction of what was due on its Public Finance Corp bonds.

It marked the most notable default in the U.S. $3.7 trillion municipal bonds market since Detroit defaulted on $1.45 billion of insured pension bonds before filing for bankruptcy in 2013.

In its statement on Wednesday, PREPA said it will continue negotiating with its bond insurers as well as those lenders who were not party to the deal.

Under the accord reached with the ad hoc group, bondholders will have the option to receive securitization bonds http://feeds.huffingtonpost.com/c/35496/f/677045/s/4984be05/sc/15/l/0L0Shuffingtonpost0N0Cwiseradvisorcom0Chow0Eto0Eplay0Eretirement0Eca0Ib0I80A70A6380Bhtml/story01.htm that will pay cash interest at a rate of 4 percent to 4.75 percent, depending on the rating obtained, or convertible capital appreciation securitization bonds that will accrete interest at a rate of 4.5 percent to 5.5 percent for the first five years.

In either case, the bonds cannot be called for 10 years afterwards which then can be called at par, according to a term sheet released by PREPA. The securitization bonds will receive interest in cash or capital appreciation only for the first five years following issuance, the term sheet said. The scheduled maturity is in 2043.

Terms of the deal states that the bonds must receive an investment grade rating from at least one of the three major ratings agencies.

"(The deal) provides PREPA with a fresh start and financial flexibility, with bondholders providing meaningful sacrifices to make that happen," said Stephen Spencer of Houlihan Lokey, the PREPA Bondholder Group's financial advisor, in a statement.

The deal, assuming participation from 75 percent of uninsured bondholders outside the group, is forecast to reduce PREPA's total debt principal by $670 million and save more than $700 million in principal and interest payments over the next five years, said PREPA's Chief Restructuring Officer Lisa Donahue in a statement.

Under a forbearance agreement with creditors, PREPA was safe from lawsuits as the two sides negotiated.

Creditors could have terminated the deal if a restructuring pact was not reached by midnight on Tuesday, Sept.

1.

PREPA said on Wednesday it agreed to an extension of the forbearance agreements through Sept. 18, 2015 with all the creditors party to the original deal except bond insurer National Public Finance Guarantee Corporation, a unit of MBIA Assured Guaranty, another bond insurer, was also party to the forbearance deal.

Shares of Assured Guaranty rose 5 percent while MBIA rose 14 percent. Puerto Rico banks were also sharply higher such as Popular Inc, up 6 percent, and OFG Bancorp up 22 percent.

GOVERNMENT PLANS

Pension fund weighs shift to safety Los Angeles Times - 9/3/15 by Dean Starkman and Melody Petersen

Via LexisNexis Licensed Text: Los Angeles Times

The California State Teachers' Retirement System, the nation's second-largest public pension system, is considering a new strategy that would shift up to 12% of its $191-billion portfolio into safer investments, such as long-term Treasury bonds.

The strategy is one of the most aggressive actions by a major public pension fund to lower its risk of losses, especially from stock markets.

The potential moves, discussed in a meeting of the fund's investment committee Wednesday, are part of a proposal broached by the fund's staff and consultants for creating a complex, highly managed portfolio to mitigate risk.

Under the plan, CalSTRS would move up to $20 billion in ways that would enable it to maintain its target of earning returns of 7.5% a year on its investments.

The strategy offers "significant diversification benefits" to offset the risk of more volatile asset classes, such as stocks, real estate, private equity and fixed income, according to a CalSTRS study posted on its website.

The questions of whether to adopt the strategy and how much to allocate to the program are "the most significant http://www.reuters.com/article/2015/09/02/usa-puertorico-idUSL1N1180GS20150902 potential change to the current portfolio" currently under consideration, the study said.

No decision was made on the strategy, and officials said in the meeting that there was no need to rush into a decision.

The discussion about dialing back investment risk, which has taken place over months, comes amid a wild period of volatility in the stock market that has seen major U.S. stocks plunge more than 7% in the last month.

The roiling domestic and worldwide markets are reflecting growing concerns over the health of the Chinese economy and fears of a global economic slowdown.

A strategy such as CalSTRS is considering raises the question of whether such a move would hamper the fund's ability to meet its investment target of 7.5%, which is in line with other pension plans but is what analysts consider aggressive nonetheless.

Michael Rosen, principal of Angeles Investment Advisors, a Los Angeles pension consultant, said that to contemplate such a move, investors need to understand their goal and then execute the strategy in a "systematic and disciplined" way.

"If it's to stay out of the next 5% drop in the market, OK. But the question might be, why do you care about such a move?" he said.

At Wednesday's meeting, Steven Tong, a CalSTRS investment executive, said the goal of the program was to reduce risk "without degrading overall investment returns."

Alan Emkin, managing director of Pension Consulting Alliance, one of the main consultants to the fund, acknowledged that the risk-mitigation strategy, which would involve active portfolio management, would be more expensive than conventional investments, such as stocks and bonds.

"These are more expensive," he said. "We think they can work."

Paul Rosenstiel, a committee member, asked why other public pension funds weren't using such a program if it could truly mitigate risk while maintaining targeted returns.

"You guys are really smart, but why should we have confidence that you're smarter than everybody else?" he said. "This sounds too good to be true. We have figured out a way to mitigate downside risk without compromising returns."

Staffers and consultants said other pension funds and endowments, particularly larger ones, have begun using the strategy.

"This is not you by yourself," Emkin said.

The California Public Employees' Retirement System also is discussing a plan to move more of its investments to bonds and other more conservative investments. Under the plan, the change would be made slowly and gradually over the coming decades. CalSTRS indicated its plan also would develop over a period of time.

CalPERS staff has estimated that the fund's investment returns would gradually be reduced if more money is put into bonds. Lower returns would require the state, cities and other local governments to contribute more taxpayer money to cover workers' pensions.

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Chicago Faces Reckoning as Deficit Pressure Builds for Emanuel Bloomberg - 9/2/15 by Elizabeth Campbell http://www.lexisnexis.com/terms/copyright-permission-statement.aspx http://www.latimes.com/business/la-fi-calstrs-bonds-20150903-story.html

Chicago Mayor Rahm Emanuel sat on a stage at a community college gymnasium for nearly two hours as residents stepped up to the microphone to plead for more money for buses, schools and programs for the mentally ill.

The mayor jotted notes as the crowd erupted into angry chants and jeers. Then he explained there was little extra cash to be had. "We have a budget deficit and then pension payments," Emanuel, a Democrat, said at the end of the meeting Monday at Malcolm X College. "We have changes we're going to have to make."

Chicago is facing a $426 million budget shortfall next year and needs to pay down a $20 billion debt to its workers' retirement funds that's left it with a lower credit rating than any big U.S. city except Detroit. After its bond prices tumbled this year when investors demanded higher premiums to lend to the third-largest city, Emanuel is under growing pressure to stanch the fiscal bleeding by raising taxes, cutting spending and putting more into a pension system the city has shortchanged for years. He's set to release a spending plan on Sept. 22.

"Chicago is really at a crucial point here," said Ty Schoback, a senior analyst in Minneapolis at Columbia Threadneedle Investments, which manages about $30 billion in municipal bonds, including some Chicago debt.

"It's going to be within Chicago's control to demonstrate to the market that they have the willingness to make the difficult but necessary fiscal decisions."

While Chicago's economy recovers, the population grows and its tax revenue rebounds from the toll of the recession, the city is facing a fiscal reckoning from years of failing to save enough to pay the benefits it promised employees. Over the past decade, Chicago has put $7.3 billion less into the pension funds than actuaries recommended, which is pushing up its bills. The city's next annual pension payment is projected to jump to $976 million, an increase of 10 percent.

The mounting debt led Moody's Investors Service to lower its rating on Chicago's $8.1 billion of general obligations by two steps to Ba1 in May. Standard & Poor's and Fitch Ratings followed by downgrading the city to BBB+, three levels above speculative grade.

The downgrades have caused the price of Chicago bonds to tumble. A portion of $58.5 million of taxable securities maturing in 2033 traded Tuesday at an average of 88.6 cents on the dollar, down from 99.7 cents on April 30.

That pushed the yield to 6.3 percent, 3.6 percentage points more than benchmark debt. That gap is up from 2.5 percentage points at the end of April.

When Chicago sold bonds in July, investors demanded yields of 5.67 percent on 20-year federally tax-exempt securities, about 2.5 percentage points more than benchmark municipal debt.

"Their big issue continues to be their long-term liability in the form of pension obligations," said Peter Hayes, the head of municipal bonds for New York-based BlackRock Inc., which oversees $116 billion of the securities. He said the firm isn't adding to its Chicago holdings. "How they build some of the elements of that into the budget is going to be very, very critical. If they truly address this liability from the revenue standpoint and that becomes credible, the bonds would have the ability at improve."

Chicago's effort to reduce its pension liabilities hit an obstacle in July, when a judge ruled the benefits cuts it sought to implement were illegal. The city will appeal the decision to the Illinois Supreme Court, which in May threw out a pension overhaul adopted by the state, saying workers' pensions are protected.

On top of next year's deficit, the city still hasn't come up with the $549 million it needs to put into its police and firefighter funds this year. While Illinois's Democrat-led legislature passed a plan to lower that payment to $328 million, Republican Governor Bruce Rauner has yet to sign it.

Emanuel, who took office in 2011, hasn't raised property, gas or sales taxes. During his reelection campaign this year, he said an increase to real-estate taxes, which generated $824 million last year, would be a last resort.

As the mayor entered the town hall meeting Monday, he was met with the chant "Rahm don't care" by those angered at neighborhood school closings. Over almost two hours, he listened as residents suggested boosting taxes on liquor, regulating ride-hailing companies such as Uber Technologies Inc., taxing trades at Chicago's options and commodities exchanges, and suing banks to recoup fees the city had to pay to back out of derivative trades after its credit rating was cut.

Wilhemenia Taylor, 58, who owns a home in the city, said she's concerned about what the budget will bring.

"I'm worried about cuts to the public school system, and higher taxes," Taylor, a teacher's assistant, said in an interview while sitting on red bleachers. "And the neighborhoods are going down."

Despite the difficulty, it's important for Chicago to demonstrate to investors and credit-rating companies that it's taking strides to meet long-term obligations that have been neglected for years, said Richard Ciccarone, Chicago-based chief executive officer of Merritt Research Services, which analyzes municipal finance.

"They've got to come up with a plan to show some willingness to pay," Ciccarone said. "We need to show the city's ability to tap that economic base that it has."

http://www.bloomberg.com/news/articles/2015-09-02/chicago-faces-reckoning-as-deficit-pressure-builds-for-emanuel