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Illinois cities now facing public pension crises

By   /   October 29, 2013  /   No Comments

By Benjamin Yount | Illinois Watchdog

SPRINGFIELD, Ill. —  Chicago taxpayer could see their property taxes double or services cut if Illinois lawmakers don’t come to the rescue with pension reform.

AP file photo

SERIOUS BUSINESS: Chicago Mayor Rahm Emanuel puts it simply: “Should Springfield fail to pass pension reform for Chicago soon, we will be right back here early next year to start work on the city’s 2015 budget, a budget that will either double city property taxes or eliminate the vital services that people rely on.”

It’s the third pension crisis facing Illinois taxpayers, but one that  and lawmakers who seem dumbfounded.

The state’s primary pension crisis, Illinois’ worst in the nation $130 billion pension debt, continues to confound lawmakers. The second crisis, whether  taxpayers will flee the state, is a matter only time will tell. But cities and towns could see their pension crisis dealt with in a matter of months.

“Should Springfield fail to pass pension reform for Chicago soon,” Chicago Mayor Rahm Emanuel said in a budget speech last week, “we will be right back here early next year to start work on the city’s 2015 budget, a budget that will either double city property taxes or eliminate the vital services that people rely on.”

It was action in Springfield, the mayor said, forcing the local pension crisis.

In 2010, Gov. Pat Quinn signed a pension “reform” law that created a second tier for police officers and firefighters. Anyone hired to a police station or firehouse after Jan 1, 2011, was to work until age 55 — not age 50 —  and would see a cap on their salary when it came time to calculate their pension, stopping end-of-career pay spikes.

In exchange, cities were told they would have to make sure local police and fire pensions were fully funded.

“The city of Chicago has been operating on a formula where they have had very low payments on pensions,” Ted Dabrowksi, the vice president of policy for the Illinois Policy Institute. “If there is no pension reform, the law states that Chicago has to raise property taxes. And that’s a killer for Chicago.”

And not just Chicago. Cities across Illinois are realizing they have a few months before they, too, will have to find millions of new dollars to pay for their underfunded pensions.

“We are on a deadline to make sure we fund our pensions appropriately,” Bloomington Alderman Scott Black told Illinois Watchdog.

WHEN CHICAGO TALKS: Dabrowksi says state lawmakers are likely to listen to Chicago's pleas for help.

WHEN CHICAGO TALKS: Dabrowksi says state lawmakers are likely to listen to Chicago’s pleas for help.

Bloomington needs to find $1.6 million for its pension payment next year. The central Illinois city is looking at tax or fee increases to come up with that money.

“We have to get aggressive in how we fund pensions,” Black said. “The plans that we’ve proposed are long-term. We’re talking 30 years.”

Black said the other option, which does not include a tax increase, would have the city paying “astronomical” balloon payments within five years.

Illinois lawmakers have done little but talk about how they need to overhaul the state’s pensions for years. The most recent pension reform effort stalled out over the summer.

But the urgent demand from Chicago could be enough to spur lawmakers to fix local pension first.

Dabrowski said state lawmakers usually listen when the city of Chicago speaks.

“If (Chicago’s) pensions are falling apart, you can bet it going to affects taxes across the state. It is going to affect the way money is distributed across the state. And it matters.” Dabrowski said.

Lawmakers will return for three more days of the do-nothing fall veto session next week. The General Assembly is set to return to Springfield again in January.

Contact Benjamin Yount at BYount@Watchdog.org and find him on Twitter @BenYount.

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