By Wolf Richter, a San Francisco based executive, entrepreneur, start up specialist, and author, with extensive international work experience. Originally published at Wolf Street

Chicago is another trailblazer. But it’s not alone. Other cities are lining up behind it. Bankruptcy may still be the route to go. But until then, homeowners, renters, drivers, users of phones, etc. – in other words regular families who’re just sitting ducks – are going to get squeezed dry, in order to slow the momentum of the public-employee pension crisis eating up the city’s and the school district’s finances.

“Because of a new accounting rule, Chicago now has to report its pension debt on its balance sheet,” explains Truth in Accounting. “As a result, the city’s reported pension debt grew from $8.6 billion in 2014 to $33.8 billion in 2015.”

The funding hole for pensions amounts to $18.6 billion, according to current estimates, despite six years of booming asset prices. What is this going to look like when asset prices sag?

The City Council approved Mayor Rahm Emanuel’s $8.2 billion budget yesterday. Crisis or no crisis, it’s up 4.8% from last year. There wasn’t anything to debate because the tax and fee hikes had been done outside the budget process.

But this is what Chicago has to deal with. On November 9, S&P Global Ratings cut Chicago Public Schools (CPS) to deep junk (triple-C), citing the district’s “continued weak liquidity in its most recent cash flow forecast and reliance on cash flow borrowing, combined with the increased expenditures in the district’s new labor contract that exacerbate the district’s structural imbalance challenges.”

On Monday, the district scrapped efforts to sell $426.3 million of bonds this year, citing “changing market conditions.” It coincided with the post-election jump in interest rates. A spokeswoman told the Chicago Tribune, “We’ll sell the bonds when market conditions are optimal.”

Last January, the district already delayed an $875-million bond sale “that became tainted by bankruptcy talk,” as Reuters put it at the time.

On November 7, Moody’s affirmed its junk rating for the city (Ba1), with negative outlook, citing “a very weak balance sheet arising from high and growing unfunded pension liabilities.”

The rating acknowledges the benefit of significant tax hikes [we’ll get to this “benefit” in a moment] that will fund increased pension contributions and reduce the risk of plan asset depletion. However, the city’s unfunded pension liabilities will continue to grow, albeit at a slower rate.

Moody’s also stamped its “negative outlook” on Chicago’s rating due to the risks of “potential contagion” from the school district:

Sustained fiscal stress at CPS could pressure Chicago’s credit profile in various ways, from constraining the city’s practical ability to raise revenue for city obligations to raising the city’s borrowing costs.

The city’s borrowing costs have already blown through the roof, as our Chicago gadfly from Truth in Accounting, Bill Bergman, points out: Sinkhole City Chicago in Worse Fiscal Shape than Detroit?

But even squeezing the families in the city for their last dime isn’t going to solve the problem, according to Moody’s:

Further, although the significant tax increases adopted by the city will support higher pension contributions, high and growing pension debt remains a key credit challenge.

These families have been hit, and will continue to get hit, by a hail of tax, fee, and fine increases. Pension promises, made by politicians to buy votes and curry favors with special interest groups years or even decades ago have turned out to be toxic for municipal budgets. Chicago may well be the next big city to be felled by them. Meanwhile, families are getting squeezed.

According to the Chicago Tribune, the endless series of tax and fee hikes, once they take effect in full, will make life for the average family $1,692 a year more expensive than it was in 2011, when Mayor Emanuel took office and started addressing some of the shortfalls. And that still doesn’t fix the problem. It just slows the momentum toward bankruptcy.

Here are some major nuggets of this endless series of squeezes that started five years ago:

Property tax hikes of eventually $994 a year on a typical $250,000 home. Some of it already kicked in. $348 will kick in next year. Another $106 per average homeowner will commence in 2018 and 2019.

Water and sewer tax hikes, passed in September, phased in over four years, eventually totaling $355 a year in increases, after already having been doubled in 2011.

Garbage pickup fee increase of $114 a year, approved in 2015, for a single-family home.

A fee per store-provided disposable bag of 7 cents. This is supposed to raise $13 million in 2017.

Parking gets more expensive: 685 new parking meters in and around the central business district and in neighborhoods. Parking rates at both airports will jump to pay for airport improvements and operations. To render drivers even closer to insanity, surge pricing will come to parking meters near Wrigley Field for games and events. Parking rates at commercial loading zones will also jump.

A 911 phone tax hike of $50.40 a year for a maximum of three phone lines (mobile or landlines), passed in 2014.

A new cable TV tax of $19.40 a year, on a monthly bill of $80, approved in 2014.

The tax, fee, and fine increases over the past five years “approach $1.9 billion,” according to the Chicago Tribune. Alas: “That doesn’t include new sales and beverage taxes approved by the County Board under board President Toni Preckwinkle, which are slated to eventually raise another $698 million.”

Much of this moolah squeezed is supposed to prop up municipal pension liabilities:

The 911 tax is going to the laborers’ retirement fund at about $40 million a year. The city property tax hikes are being poured into the police and firefighters’ funds at $543 million a year. Another $250 million or so a year is going to the CPS retirement fund. The new water and sewer tax will result in an additional $239 million a year for the municipal workers’ pension fund.

Chicago is not alone in its plight. Many states, cities, and municipal entities are sinking into a similar pension quagmire with massive costs for the people who live there. But Chicago is just a little further down the long road than some of the others.

Already there are signs of an impact on the housing market. Read… Is Chicago’s Housing Market Next?