Quinn signs Chicago pension legislation

Quinn signs Chicago pension legislation

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CHICAGO (FOX 32 News) -

Gov. Pat Quinn has signed legislation that would help Chicago reduce a multibillion-dollar pension shortfall, but could lead to a property tax increase.

Quinn is a Chicago Democrat facing re-election this fall. He had given little hint of his plans ahead of Monday's announcement, aside from saying that he opposes raising property taxes.

Chicago has the worst-funded pension systems of any major U.S. city.

Fifty-two percent of City Hall's work force would be affected by the new pension reform law. Leaders of their 30 separate unions reluctantly cut a deal with Mayor Rahm Emanuel that would reduce some future pension raises, but avert a looming catastrophe.

“Within less than a decade, 61,000 people were going to be without a pension check. We're securing that,” said Emanuel.

The new law demands an extra $750 million from taxpayers in the next five years, though only $50 million in the first year. The governor last Friday signed a new law allowing Chicago to raise that much money just from a higher cell phone tax. That would allow Quinn and Emanuel to avoid a Chicago property tax increase until after each runs for re-election.

However, experts warned huge tax increases could be coming and not least because of the desperate condition of the city's police and fire pension funds, which neither one is affected by today's new reform law.

“The State of Illinois says under current law that the City has to contribute $600 million more this year in 2015 to the Police and Fire Pension funds. The city -- Mayor Emanuel and his financial team -- doesn't have $600 million. That would require a 75% increase in the property tax levy, just for those two pension funds,” said President of the Civic Federation Laurence Msall.

Experts warned one of those funds, covering Firefighters, could be completely broke in 5 to 10 years.

Critics at the Illinois Policy Institute said local and state governments should move to phase out pensions altogether for future employees, offering instead a 401-K style retirement benefit combined with a smaller guaranteed pension.

“What it does is it cuts Chicago's unfunded pension liability in half immediately. And that gives the city all kinds of room to manage its problems and to avoid tax hikes,” said Ted Dabrowski, Vice President of Policy at the Illinois Policy Institute.

Leaders of the General Assembly indicate that after this November's election, they'll try to reform the separate and nearly broke pension funds of Police and Firefighters. As for over at the Board of Education, they’ll try to reform the pension fund for Chicago teachers.

The following statement is from the 'We Are One Chicago' union coalition in response to Gov. Quinn's signing of Senate Bill 1922:

"Mayor Rahm Emanuel's pension-slashing plan, now signed by the Governor, is wrong for Chicago. This is no victory for the Mayor, but a huge, missed opportunity to find a truly fair, constitutional solution.

"Senate Bill 1922 would slash the value of pensions by one-third within twenty years of retirement. It inordinately hurts women, people of color, and low-income workers and retirees, disrupting and harming our city's communities.

"Our coalition has presented numerous alternatives that would rebalance our tax code and ask those who can most afford it -- the wealthiest among us -- to pay their fair share. Unfortunately, some elected officials have chosen to ignore the constitution and these fairer revenue alternatives, opting instead to slash the retirement life savings of our city's public health professionals, teachers' aides, librarians, cafeteria workers, and other public employees and retirees.

"The Mayor's plan is unfair and unconstitutional, and our unions intend to seek justice and will be preparing to file suit."

Coalition members opposing SB 1922 include the Chicago Teachers Union, AFSCME Council 31, the Illinois Nurses Association, the Fraternal Order of Police Lodge 7, Chicago Firefighters Union Local 2, and the Chicago Sergeants and Chicago Lieutenants Associations/Police Benevolent and Protective Association Unit 156.

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