In an eleventh hour announcement – just as reporters were calling it quits on Friday, Chicago mayor Rahm Emanuel announced his plan to make pending payments to the city’s fire and police pension fund — long a thorn in his economic side. But, the results hinge on a casino to pay the tab, and it’s not even certain whether a casino will be allowed, which caused many in the media to scratch their collective heads.
Key to the plan is essentially a down payment now of $300 million, then a staggered payment in 2016 of $619 million, then an increase of $672 million in 2017, and then a much larger payment of $824 million by 2020. It then levels off after 2020 with the 90 percent needed to cover all liabilities by 2055; which is currently at 90 percent by 2040.
This is less than the $838 million that the city would pay under existing laws, and gives the city some time, but critics point out that this is the type of arrangement that got the city to the point that it is now.
The Chicago Tribune reported that “Rep. Jeanne Ives, R-Wheaton, said the measure was repeating past mistakes by putting off payments and amounted to an “underfunding” of the system. She questioned the wisdom of relying on money from a casino that has yet to be approved.”
Kelley Quinn, spokesperson for Emanuel, said that the plan had the support of the unions, but due to the lateness of the report, no union comments were available. And, some city hall observers say that this was intentional, so that criticism could be blunted, while the mayor’s team can craft a series of rebuttals.
While the casino is definitely the lynchpin of the plan, its viability seems at stake and Ives remarked, “You’re essentially in fantasyland here assuming you’re going to get a casino.”
Steve Brown, spokesperson for Speaker of the House Michael Madigan, said there could be a vote in Springfield on Saturday, if the votes were there. But, others are quick to point out that the state budget, for the new fiscal year would take precedence over the plan.
Emanuel’s plan does not call for either a reduction in benefits, or a change in the contributory amounts, so the plan can pass constitutional muster, and avoid any messy confrontations.
What is not off the table is an increase in property taxes, and an expansion of taxes on services, a suggestion long touted by the mayor as a revenue source.
With a 5-4 decision in a house committee, the proposal now moves onto the full house as early as Saturday, budget talks notwithstanding.
This plan also allows a pensioner of at least 50 years old, with 20 years of service to get annual benefits “equal to 125 percent of the amount earned by people living at the poverty level, as determined by the federal government”, the Tribune noted, but also allows that the the city can be taken to court, if the payments are not made.