Mayor Rahm Emanuel’s plan to raise property taxes by $250 million and employee contributions by 29 percent to shore up two city employee pension funds is “a step forward” in an “arduous process” but not a silver bullet, a Wall Street rating agency warned Monday.

Moody’s Investors noted that it has already dropped the city’s bond rating four notches in the last year because Chicago’s $32 billion unfunded pension liability — $13.8 billion of it from the municipal employees and laborers pension funds and $18.2 billion for police and fire — is eight times the city’s operating revenue.

That’s the “by far the highest” of any rated U.S. local government, the rating agency said.

But even if the General Assembly signs off on the pension reforms and the City Council does its part by raising property taxes by $50 million a year for each of the next five years, pensions will “continue to weigh heavily on the city’s credit quality,” Moody’s said.

Without reform, the municipal employees and laborers pension funds could go bankrupt in the next decade, placing “extreme budget stress” on Chicago taxpayers by forcing the city to “pay annuitants directly from operating revenues,” Moody’s said.

But Chicago isn’t out of the woods even with the reforms, which would raise employee contributions by 29 percent while modifying  “compounded cost-of-living” adjustments and eliminating COLA increases altogether for four years.

“The proposed reform reduces the likelihood of insolvency for the Municipal and Laborers plans by slowing the growth rate of the unfunded liabilities. … If implemented, the legislation would immediately reduce the Municipal and Laborers plans’ unfunded actuarial accrued liability,” Moody’s wrote.

“However, we expect [that liability] would then escalate for a number of years before declining. Accrued liabilities would exceed plan assets for years to come and, if annual investment returns fall short of the assumed 7.5 percent, the risk of plan insolvency may reappear.”

The Moody’s report went on to raise what it called “several other caveats.”

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The General Assembly and Gov. Pat Quinn must approve the mayor’s plan, and neither has embraced it. The plan must survive a legal challenge from parties citing an Illinois Constitution that states pension benefits “shall not be diminished or impaired.”

And, most significantly, the mayor’s plan “does not address” police and fire pension plans that are even closer to running out of money than the two funds Emanuel is trying to save.

Next year, Chicago is required by state law to make a $600 million contribution to stabilize police and fire pension funds that have now have assets to cover just 30.5 percent and 25 percent of their respective liabilities.

On Friday, the mayor’s City Council floor leader urged the General Assembly to put off the balloon payment to lift the sword hanging over Chicago taxpayers and give the mayor time to negotiate a similar deal with police and fire unions.

But, Moody’s wrote, “The requirement presents a formidable budget pressure for Chicago.”

The mayor’s pension plan appeared to be on the fast track in Springfield last week, only to hit a roadblock from Republican and Democratic lawmakers alike.

House Minority Leader Jim Durkin, R-Western Springs, has said he’s open to working with Emanuel but urged the mayor to dump the property-tax language from the bill entirely.

On Monday, the mayor refused to say whether he was willing to drop any reference to the property tax from the bill, as Durkin has demanded.

But Emanuel said he’s not trying to force state lawmakers to wear the political jacket for a $250 million property tax increase in Chicago.

“We finally have a model that brings both reform and revenue together. It was never anybody’s intention to have Springfield deal with that. That’s our responsibility,” the mayor said.

“But I do believe to actually give the 61,000 workers and retirees the certainty they deserve, you need reform and revenue. And we’ll deal with our responsibility.”

Emanuel was asked about Quinn’s lukewarm reception to the bill, in part, because the governor has promised property tax breaks in exchange for making permanent a temporary increase in the state income tax.

“When we’re done with the bill, I think he sees how important getting pension reform is to the 60,000 workers who require it because they work full-time to get it,” said the mayor, who has endorsed Quinn over close friend Bruce Rauner.

“This would be the type of legislation that meets the goals of the city of Chicago to make sure we have resolved an issue that was hanging over the city, hanging over our retirees, hanging over our workers, hanging over our residents. I wanted to make sure we had a proper balance to achieve that.”

The one caveat Moody’s neglected to mention is the one raised by the mayor’s own City Council floor leader, Ald. Pat O’Connor (40th).

O’Connor said Friday that the mayor’s $250 million property tax increase faces an uphill climb in the City Council, even if it clears the General Assembly, because of three political realities: the aldermanic election is 10 months away, union leaders are either sitting on the sidelines or adamantly opposed and City Council votes to raise property taxes are a rarity.