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RAHM’S POLICE AND FIRE
PENSION “FIX” BECOMES LAW
Illinois Policy Institute
On May 30,
the General Assembly voted to override Gov. Bruce Rauner’s veto of the
mayor’s police and fire pension “fix,” which allows Chicago to extend
the timeline of its pension payments to the funds by 15 years to 2055
from 2040. Now, the plan moves forward – and it will cost Chicago
taxpayers an additional $18.6 billion over the next 40 years.
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 While the law reduces some of the short-term financial pressure on the city, it
will only burden Chicago taxpayers in the long run, while offering no real
retirement security for the city’s police and firefighters.
Worst of all, delaying the pension payments sets Chicago taxpayers up for
massive tax hikes. The law calls for Chicago to automatically begin raising
property taxes in 2020 to pay for the postponed contributions.
The looming property-tax hike comes as residents are already struggling with a
record $700 million hike in property and other taxes that’s supposed to help the
city pay for contributions to the police and fire pension funds.
The law will also push Chicago’s police and fire pension funds even closer
toward total insolvency. Combined, these pension systems have less than a
quarter of the funds they need now in order to pay out future pension benefits.
This “fix” of Rahm’s, as well as the recent deal the city struck with the
laborers pension fund, which exchanges higher city contributions for negligible
reforms, is a sad reminder of just how far Emanuel has fallen from his initial
reform-minded persona.
When Emanuel was elected, everyone expected him to take on the big reforms – to
not let Chicago’s fiscal crisis “go to waste.” Emanuel would be the one to
finally take on the unions and enact the pension and spending reforms former
Mayor Richard M. Daley had avoided.
But after more than four years in office, Emanuel has abandoned real reform. Now
he’s taking the easy way out by sending the bill to taxpayers.
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 Unfortunately, that bill is staggeringly high and will exact a
terrible cost on city residents.
Even with the new police and fire law, laborers deal and a $700
million dollar tax hike, Chicago isn’t close to fixing the massive
crises facing the city’s municipal, police and fire pension systems
or the collapsing Chicago Teachers’ Pension Fund.
A report by Moody’s Investors Service shows taxpayer contributions
to city-worker pension systems are going to rise significantly over
the next 15 years – and the mayor is likely to seek billions in
additional tax hikes to pay for those contributions.
Instead of enacting phony fixes that only delay payments and passing
massive tax hikes that only serve to burden residents, it’s time the
city focused on passing real reforms that can help fix the pension
crisis in the long run.
Positive reforms for the city include moving all new city employees
into 401(k)-style plans, offering optional 401(k)-style plans to
current workers and freezing city-worker salaries.
In addition, Chicago should end teacher pension “pickups” – under
which Chicago Public Schools pays for a majority of its teachers’
required employee pension contributions as a special benefit.
Those are the sorts of reforms Emanuel advocated in his early days
as mayor. To save Chicago, he must begin demanding them once again.
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