Chicago pension plans are massively underfunded to the tune of $18.6 billion. Yet, the Illinois legislature passed a bill that would actually reduce contributions to the fund.
Governor Bruce Rauner made the fiscally responsible decision to veto the bill.
As expected, Chicago Mayor Rahm Emanuel points the finger at the Governor instead of looking in the mirror to see what the real problem is.
Pensions & Investments reports Illinois governor vetoes bill to reduce Chicago fire, police pension contributions.
Illinois Gov. Bruce Rauner vetoed Friday a bill that reduces Chicago’s pension contributions to its police and fire retirement systems in the near term, nearly one year after the measure passed the General Assembly.
SB 777, which passed the General Assembly on May 31, 2015, reduced Chicago’s required pension payments to the $2.4 billion Chicago Policemen’s Annuity & Benefit Fund and the $1 billion Chicago Firemen’s Annuity & Benefit Fund over five years, starting in 2016, and extended the deadline for the fire and police pension funds to reach 90% funding to 2055 from the current 2040 deadline.
Mr. Rauner wrote in his veto letter to legislators on Friday that the bill continues the “irresponsible practice of deferring” pension funding decisions and that reducing pension contributions in the near term sticks taxpayers with higher future pension contributions.
- Governor Rauner: “By deferring responsible funding responsible funding decisions until 2021 and then extending the timeline for reaching responsible funding levels from 2040 to 2055, Chicago is borrowing against its taxpayers to the tune of $18.6 billion,” Mr. Rauner wrote. “This practice has to stop. If we continue, we’ve learned nothing from our past mistakes.”
- Mayor Emanuel: “With a stroke of his pen, Bruce Rauner just told every Chicago taxpayer to take a hike,” said Chicago Mayor Rahm Emanuel in a statement Friday. “Bruce Rauner ran for office promising to shake up Springfield, but all he’s doing is shaking down Chicago residents, forcing an unnecessary $300 million property tax increase on them and using them as pawns in his failed political agenda. And it is an unspeakable act of disrespect toward our men and women in uniform — and toward Chicago taxpayers — that the governor would veto a bill to protect taxpayers and police and fire pensions as we head into Memorial Day weekend. Decades from now, the Rauner Tax will be this governor’s legacy in Chicago.
Emanuel Wants More Can-Kicking
It’s pretty clear who is on the right side of this debate. Mayor Emanuel wants to kick the can and Governor Rauner says no.
If the Mayor does not want property tax hikes there is an easy solution: “Don’t hike them”.
The Mayor already made the largest property tax hike in history, and Chicago citizens get absolutely nothing out of it. Every penny goes to unions.
And guess what?
New accounting rules show Chicago Pension Liabilities Jump 168%!. Chicago pensions were understated by $11.5 Billion. The total deficit is now $18.6 billion.
Yet the mayor wants to further reduce contributions! Supposedly the problem will magically fix itself if only given more time and more underfunding!
Tax Hikes Not the Solution
The pension mess and the Chicago public school mess cannot be placed on the backs of Illinois taxpayer.
Mayor Emanuel already passed the biggest tax hike in history. Here are some links for discussion:
- Chicago Tax Collector Hath Arrived With Massive Tax Hike: Emanuel Says “No Stone Unturned … Not Done Yet”.
- Chicago’s Sheep Dogs Approve Mayor’s Tax on Sheep; Quote of the Day “It’s Not a Piece of Art”
- Chicago Public School System Threatens Massive Tax Hikes Via “Backdoor” Bond Guarantee
Solution is Bankruptcy
If Mayor Emanuel really wanted to do something for the city and city taxpayers, he would be begging House Speaker Michael Madigan for the one and only thing that can help the city: legislation that would allow Illinois municipal bankruptcies.
Let’s stop pretending there is another solution, because there isn’t.
Mike “Mish” Shedlock