Mayor Rahm Emanuel on Wednesday morning presented City Council with his road map to confront Chicago’s pension obligations.
That plan includes amending the Illinois Constitution to allow changes to pension benefits, specifically those calling for an annual 3 percent cost-of-living adjustment, or COLA; introducing the Fund Stabilization Bonds Ordinance, legislation that Emanuel compares to refinancing a mortgage; and using revenue from legalized recreational marijuana and a Chicago-owned casino to pay directly into those pension payments.
The first of the list – calling for a constitutional amendment to revise COLAs – has been widely criticized by labor unions, but the mayor considers them to be out-of-date and unaffordable.
“The cost-of-living adjustment is to help retirees not lose the value of their paycheck … to keep up with inflation,” Emanuel said during a press conference. “If inflation is zero, and you’re getting 3 percent compounded annually, it is not a COLA.”
“If it looks like a pay raise, performs like a pay raise, results in a pay raise, it’s a pay raise,” he said.
Leaders of the Illinois Policy Institute, a self-described free-market think tank, have called a constitutional amendment “the best case scenario” to addressing the city’s pension crisis.
“This is our preferable solution, would be to call for a constitutional amendment to allow changes in future, unearned pension benefits,” said Adam Schuster, director of budget and tax research at the Illinois Policy Institute.
“So not taking away what people have earned, but allowing [COLAs] to grow more slowly going forward,” he said.
But others call the constitutional amendment “unconstitutional.”
“You cannot reduce a benefit that was a pension benefit that was promised to an employee in the state of Illinois that’s a public sector worker as of the date of their employment. That is their benefit for their tenure,” said Ralph Martire, executive director of the Center for Tax and Budget Accountability, Wednesday morning on WBEZ’s “Morning Shift.”
“Why take away the constitutional protection for workers when legislatively, you can create a Tier II, Tier III, Tier IV that has a different cost-of-living adjustment, COLA, for workers going forward?” he said.
Schuster, Martire and Laurence Msall, president of the nonpartisan Civic Federation, join us to discuss Emanuel’s pension plan.
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