Pension obligations eat up cities' fixed costs

High pension obligations consume 10.2% of the revenue of the 25 largest U.S. cities. While second still to debt service payments, the dispersion among the pension obligations is higher and increases a municipality's cost of borrowing. Chicago's pension tread water, or the minimum payment it must make to prevent its liability from increasing, was the highest at 29.3% of annual revenue in 2018, followed by Fort Worth, Texas. Chicago's debt service was also among the highest observed by Moody's Investor Service at 13.7%, more than twice the group average.

Chicago and Fort Worth had the highest total of fixed payments relative to revenue in 2018, 44.2% and 43.1%, respectively. Chicago, had the lowest debt rating of the cohort with a Moody's rating of Ba1. Detroit was the only other rated city – El Paso, Texas, was not rated – below A, with a Ba3.