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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
payments.
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.
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
employees.
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 downgrade.
(Editing by Matthew Lewis)
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