Mayor Rahm Emanuel says a last minute change to the Chicago Pension Reform measure should solve the concerns of Gov. Pat Quinn and other lawmakers. Earlier today, the governor issued a significant blow to its prospects. When asked whether he’d support the bill, his answer: “no can do.”
“The idea that you’re just going to relegate property taxpayers to higher and higher property taxes over and over again, that’s not the way I’m going,” Quinn said. “They got to do a lot better with whatever plan they come up with.”
Statement from Mayor Rahm Emanuel:
Working with legislative leaders, bill sponsors, the Governor, and our partners in labor, we have addressed their concerns and can now move forward to save the retirements of nearly 60,000 city workers and retirees in Chicago. I reject the false choice between allowing the pension funds to go belly up, delivering thousands of pink slips to city workers, or enacting a massive property tax increase. This plan will secure these pension funds while ensuring the taxpayers don’t have to shoulder the burden alone.
BACKGROUND -- Amendment to Chicago Municipal and Laborers Pension Reform Legislation (SB1922)
After consultation with the legislative leaders, bill sponsors, the Governor, as well as our partners in labor, revisions have been made to SB1922 that will ensure it continues to meet the goal of securing the City’s municipal and laborer pension funds with a balanced plan of revenue and reform.
This legislation is similar to the parks plan that was passed with bipartisan support and remains an honest compromise that provides certainty for nearly 60,000 city workers and retirees that the retirement system they paid into will be there for them, and certainty for our taxpayers that they will not have to shoulder the burden alone.
1) Eliminates all tax provisions: This amendment eliminates any reference to a new tax or increased taxes that were part of the previous versions of the legislation to make it explicit that this legislation does not increase any taxes.
- There is no additional pension levy under this amendment. Any decisions on revenue are left up to the City’s discretion under the current traditional levy structure.
- The Mayor has been publicly explicit about his plan for a phased-in property tax increase as part of a reform and revenue balance that ensures everyone gives something so no one has to give everything. This revenue will be achieved solely through the City’s action and not through State legislation.
- As is the case under current law, the City may fund pensions through its traditional, existing levy or through other revenue sources as allowed under current law, without any additional State-mandate.
2) Provides a revised “trigger”/“offset” to ensure the fund is paid: The offset mechanism has been strengthened to ensure the funds and retirees both have real security that pensions will be funded both today and in the future. The City must pay the fund what it owes every year with two mechanisms to ensure compliance:
- Offset of state funds: If the City fails to make its annual contribution, the State can withhold funding from the City. This revised offset is no longer time limited to five years (or tied to revenue) and will remain in place for the life of the fund.
- Pension funds’ right to sue: If the City fails to make its annual contribution, the funds have the right to sue the City to force payment (no change to this provision).
3) Adds additional protection for low income retirees: This amendment adds additional protection for lower income retirees by giving any retiree with an annuity of $22,000 or less a guaranteed simple increase of at least 1% of their original annuity every year, regardless of inflation.
- This 1% floor will apply even during the 3 pause years so smaller annuities will continue to rise every year.