* Despite some media attempts to blame the stall of Rahm Emanuel’s pension proposal on mysterious behind the scenes maneuvering, sometimes a cigar is just a cigar, especially when it involves a property tax hike…
Gov. Pat Quinn on Monday made clear he’s not on board with Mayor Rahm Emanuel’s proposal to hike property taxes as a way to solve a looming pension crisis in the City of Chicago.
In a news conference today on the Near West Side, Quinn repeatedly referred to Emanuel’s plan as only a “sketch” but said he would not back a plan that relied heavily on property tax hikes.
“What I saw last week wasn’t a plan, it was a sketch,” Quinn said. “It was a sketch that would relegate property owners in Chicago, families and businesses to a future of higher and higher property taxes. I don’t think that’s a good way to go.”
“They’ve got to come up with a much better, comprehensive approach to deal with this issue,” Quinn continued. “But if they think they’re just going to gouge property tax payers, no can do. We’re not gonna go that way.”
I’m told we can expect another amendment soon, perhaps today, that will strip out the property tax language. Nothing has surfaced yet as I write this, however.
…Adding… They mayor tries to dodge responsibility for the language…
“We finally have a model that brings both reform and revenue together,” Emanuel said at an unrelated news conference when asked whether state lawmakers can be spared having to vote on a version with the property tax language in it. “It was never anyone’s intention to have Springfield deal with that. That’s our responsibility. But I do believe, to actually give the 61,000 workers and retirees the certainty they deserve, you need reform and revenue. And we’ll deal with our responsibility.”
“We will work through the issues,” he said when asked again whether he’s willing to take the tax language out of the state bill.
A leading credit rating agency has called legislation to overhaul to Chicago’s pension funds a “positive development” but says it won’t solve all the city’s problems.
The analysis by Moody’s Investor Service was released Monday. It says the proposal is “modestly credit positive” because it tackles the city’s massive and growing underfunded pension liabilities.
…Moody’s continues, the proposal calls for hitting a funding target of 90 percent in the city’s municipal and laborers’ retirement system in 40 years, not the normal 30 years that actuaries recommend. Because of that and other factors, unfunded liability in the two pension funds, which Moody’s sets at $13.8 billion in 2012, would resume rising after a brief dip. While the unfunded liability eventually would drop if plan assumptions are met, “if annual investment returns fall short of the assumed 7.5 percent, the risk of plan insolvency may well reappear.”
Moreover, Moody’s adds in what definitely is a gray-Monday report, “the proposal does not address” a shortfall in police and fire funds for which the city faces a $600 million increase in contributions next year under current state law.
Despite all those sour words, Moody’s, which rates city debt Baa1 with a negative outlook, just a couple of levels above junk, terms Mr. Emanuel’s proposal “modestly credit positive.” But Moody’s says that “even with reform, pensions will continue to weigh heavily on Chicago’s credit quality.”