A government policy researcher and former north suburban mayor has a new idea for paying back Chicago’s pension debt: directly depositing profits from government-owned assets into the city’s pension funds.
Michael Belsky, executive director of the University of Chicago’s Center for Municipal Finance and former mayor of Highland Park, wrote an op-ed in Crain’s Chicago Business proposing an asset transfer such as distributing excess cash from city-owned Midway Airport into a pension fund.
Belsky said revenue generated from “essential purpose assets,” such as a city water system, would still be reinvested into the asset’s infrastructure.
“You have to keep operating it and pay its debts, but if there are extra fees and excess cash, that can go towards paying down the pension,” Belsky said.
Another idea is selling city-owned real estate, which Belsky said can be placed into a pension fund and developed or sold if the property increases in value.
As for the state’s ballooning bill of $130 billion in unfunded pension liabilities, Belsky said the “lockbox” amendment to the Illinois constitution that passed two years ago would likely keep the state from paying off pensions with money raised from tollways, which he called “steady producers of cash flow.”
Since Mayor Rahm Emanuel first floated the idea of borrowing $10 billion in municipal bonds to tackle Chicago’s $28 billion of pension debt, two events have possibly jeopardized that plan.
First, Emanuel announced he would not seek re-election, dropping a political bombshell on the city, and secondly, the Federal Reserve increased its benchmark interest rate and signaled plans to continue raising rates.
Belsky joins “Chicago Tonight” to discuss possible solutions to pension problems in the city and state.
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