Chicago suburb of Riverside downgraded over pensions
CHICAGO – The Chicago suburb of Riverside's pension burdens led it to a rating downgrade.
Moody’s Investors Service downgraded Riverside to Aa3 from Aa2 and removed its negative outlook. It did not assign an outlook based on the low level of debt. The village has $2.5 million of rated general obligation unlimited tax debt.
The downgrade to Aa3 is based on an elevated pension burden that is expected to remain high given the village's limited ability to significantly increase contributions to forestall the growth in unfunded pension liabilities, Moody’s wrote.
The rating also takes into consideration the village's affluent tax base with close economic ties to the Chicago metropolitan area, healthy operating reserves relative to its budget, and a modest debt burden.
Moody’s has downgraded more than 30 Illinois municipalities this year with pensions a primary driver, including a handful that were cut by multiple notches.
Riverside’s downgrade underscores that more affluent communities with otherwise healthy operations are not immune from rating fallout due to mounting pension tabs for public safety funds. All now face the risk that pension funds can ask the state to intercept a municipality’s share of state collected revenues if contributions fall short of actuarial levels. The intercept legislation took effect this year.
Further growth in the village’s pension burden or a material decline in operating reserves or liquidity could drive further credit erosion. Riverside is 11 miles west of Chicago and has a population of 8,900.