If Chicago wants to reach full actuarial funding status for its four pensions, it’ll need $1 billion in new taxes over the next three years. But Mayor Lori Lightfoot reportedly has another plan up her sleeve: to move the Chicago’s $28 billion in pension liabilities to state government’s hands.
“A statewide pension system would involve consolidating various municipal pension systems into one pension system. Under the mayor’s [reported] proposal, not only would the plan be to consolidate it but the state would become responsible for funding various pensions plans,” said Carol Spain, director of U.S. Public Finance at S&P Global.
“[The system] would relieve the local government from needing to levy property taxes or other local taxes to pay for their pension plan,” she said.
But not everybody’s on board. Gov. J.B. Pritzker said Monday at an event celebrating Illinois’ new capital program that the state’s near-junk status would prohibit it from taking on Chicago’s pension woes.
“There are not liabilities that can be adopted by the state that would not drive us into junk status,” he said.
Spain and Daniel Hertz, research director at the Center for Tax and Budget Accountability, join us in discussion.