Chicago mayor proposes city ordinance to
boost pension funding
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[June 29, 2017]
By Julia Jacobs and Karen Pierog
CHICAGO (Reuters) - Chicago Mayor Rahm
Emanuel on Wednesday proposed an ordinance that would lock in higher
city payments to two pension funds after state legislation to do so
became mired in Illinois' political stalemate.
The ordinance would put payments for
the city's municipal and laborers' pensions on a five-year ramp to reach
actuarial levels that would make the retirement systems 90 percent
funded by the end of 2058. The city has already put into place a tax on
water and sewer usage and a telephone surcharge to fund the higher
Without the additional money, the two pension funds would become
insolvent within 10 years.
The mayor told reporters he decided to seek city action on pension
payments to send a positive signal to credit ratings agencies and to
ease city workers' possible concerns about their retirement security.
Emanuel said using this “home-rule” option offers a way to address the
city’s pension problem given opposition from Governor Bruce Rauner.
“We are taking steps to wall ourselves economically and financially and
fiscally off from Springfield - and specifically Governor Rauner’s
chaos,” he said, referring to the state capital.
The Republican governor vetoed a bill in March that would have mandated
the payment plan in state law, saying it would lead to a city tax hike
and that a fix for Chicago needed to be part of broader, statewide
pension funding changes. Those cost-saving changes are a factor in
Illinois' ongoing political impasse that has left the state without a
complete budget for two years.
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Chicago Mayor Rahm Emanuel speaks during an interview at City Hall
in Chicago, Illinois,
U.S. June 14, 2017. REUTERS/Joshua Lott
A second identical bill for Chicago was subsequently passed by the
Democratic-controlled legislature but has not been sent to Rauner.
Molly Poppe, a city spokeswoman, said the mayor still wants to
codify the payment plan in Illinois law, and needs the state to
enact a bill requiring higher pension contributions from some
Credit ratings for the nation's third-largest city have tumbled into
the low investment grade to junk levels due largely to an unfunded
pension liability that stood at $33.8 billion at the end of fiscal
2015 for its four retirement systems.
S&P Global Ratings, which rates Chicago BBB-plus, earlier this year
called pension funding "critical" to the city's budget stability and
said a delay in boosting pension contributions could lead to a
(Editing by Matthew Lewis)
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