July 23--Cook County Board President Toni Preckwinkle's sales tax hike is playing better on Wall Street than back home.
Moody's Investors Service called Preckwinkle's 1-percentage-point tax hike a "credit positive" in a statement issued Thursday. The ratings agency noted that Preckwinkle has pledged to use most of the estimated $474 million a year from the tax hike to restore financial health to the county's underfunded pension system -- a move that will give buyers of county bonds greater confidence that they've made a reliable investment over the long haul.
But the Moody's view isn't all rosy. The ratings agency indicated that state law might need changing to allow the county to put more money into its pension system.
It also contends that the sales tax increase, which will give Chicago the highest sales tax of any major U.S. city at the start of next year, "effectively removes a sales tax increase as a politically palatable revenue option for other overlapping units of local government, namely Chicago, which will need to make substantial budgetary adjustments to address its pension challenges."
Preckwinkle has said she's taking a needed step to ensure the county's financial stability moving forward. "Moody's announcement ... recognizes that the steps we are taking are critical components of a long-term comprehensive financial plan," Frank Shuftan, a county spokesman, said in a statement.
The county portion of the sales tax will increase from 0.75 percent to 1.75 percent. The overall sales tax in Chicago would rise to 10.25 percent.
hdardick@tribpub.com
