Chicago was downgraded three notches today by another credit rating agency, with a negative outlook clouded by pension liabilities and a struggling economy.

Fitch Ratings dropped the city's $8 billion in unlimited tax general obligation bonds to A- from AA-, along with $497.3 million in bonds backed by sales taxes.

The city's $200 million commercial paper notes dropped three notches, to BBB+, from A+, putting them two notches above junk bond status.

The move puts Fitch in line with the rating Moody's Investors Service imposed in July,, when it lowered Chicago's general obligation bonds three notches to A3.

Standard & Poor's Corp. rates the city's debt two notches higher, at A+, but its outlook changed to negative in September.

Fitch said the city's recently proposed 2014 balance budget appears to be “achievable” with a variety of recurring and one-time revenue increases. “However, Fitch will not consider the city's financial operations to be structurally balanced until recurring revenues support recurring expenditures, including actuarially based pension costs,” the agency said.

If Chicago and other local governments raised property taxes to cover the annual required pension contribution, with no reduction in benefits, payers would face a 35 percent tax increase, according to Fitch, which "believes such an increase could present stress to the local economy, which has been slow to recover from the recession."

In a statement today, Mayor Rahm Emanuel said: “Comprehensive pension reform in Springfield must include reform for municipalities such as Chicago. Reform has been deferred and delayed for decades and Springfield's inaction has a direct impact on how credit ratings view the city and state's financial stability. The pension crisis in Illinois is not solved until relief is brought to Chicago and all of the other local governments across our state that are standing on the brink of a fiscal cliff because of our pension liabilities."