Giving Compass' Take:

• An Illinois law that allows the state to withhold funding for cities that don't adequately fund their public safety pensions is putting some cities on the road to bankruptcy. 

• How can policies help cities pay their pensions rather without crippling them? What states have more successful policies? 

• Learn more about Illinois' troubles.

Two cities in Illinois are facing a cash shortage thanks in large part to the state. And some say more cities may soon be facing the same fate.

At issue is an eight-year-old state law that is designed to compel municipalities to fund their public safety pensions according to statutory minimum levels. In places that fail to do so, police and firefighter pension boards can petition the state comptroller to intercept state revenues due to the cities and towns.

That's what's happening in the two Chicago suburbs of Harvey and North Chicago. But, says Laurence Msall, president of the nonprofit, Chicago-based Civic Federation, they won't be alone for long. “Harvey is really only the tip of the iceberg in terms of financially distressed cities in Illinois,” he says. A big reason, he adds, is because the state doesn’t have any reasonable mechanism for identifying and helping these struggling cities “short of pushing them into bankruptcy.”

According to an S&P Global Ratings analysis, more than a dozen Illinois cities aren’t paying their state-mandated minimum pension contribution.

Meanwhile, some cities have been resorting to last ditch efforts to make payments. Danville hiked property taxes and tripled its annual so-called public safety pension fee to try and cover its debt. The town of Alton sold off its sewer system and water treatment plant this year to pay its unfunded pension liabilities. “It begs the question," says Msall. "What will they do next year?”

Read the full article about cities on the brink of bankrupcy by Liz Farmer at Governing.