Page "Richard M. Daley" Paragraph 78

Daley inherited a city with revenue-generating assets, manageable debt and pension funds so flush with cash that he was able to use some of the money to provide a one-time property tax break, but he left behind a city literally on the brink of bankruptcy, with a structural deficit that Mayor-elect Rahm Emanuel said could approach $ 1. 2 billion when unfunded pension funds are factored in.

The Daley administration ’ s spending outstripped its resources by hundreds of millions of dollars every year.

Wall Street analysts noted that Daley began drawing on the city ’ s reserves as early as 2006, before the recession began.

Even after the recession hit, the city ’ s budget continued to increase, to a total of more than $ 6 billion a year.

Factoring in underfunded city employee pensions, the city ’ s real annual deficit exceeded $ 1 billion.

The independent Fitch Ratings credit-rating agency downgraded the city of Chicago's bond rating in August 2010, citing the Daley administration ’ s habit of drawing on reserve funds for general operating expenses and underpaying its pension funds since well before the recession started, and pointed out the city lacks a plan for developing new revenue and faces a rising tide of fixed operating costs.

“ While there had been sound economic growth in years prior to 2008, there were still sizable fund balance drawdowns in both 2006 and 2007 ,” Fitch wrote.

In January 2011, Moody's Investors Service downgraded to a " negative " outlook from " stable " some of the revenue bonds that the Chicago Department of Aviation had issued to help pay for the $ 15 billion O ' Hare Modernization Program and related capital-improvement projects.

Moody's cited concern to investors about the city's latest gambit to postpone repayment of interest and principal on some construction bonds until at least 2018, resulting in much larger payments over the long run.