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*** UPDATED x1 - Pension bill clears House *** Rahm’s pension bill back on track? We’ll see today

Tuesday, Apr 8, 2014

*** UPDATE *** The mayor’s pension bill easily passed the House 73-41. On to the Senate.

[ *** End Of Update *** ]

* I told you this would happen yesterday

Mayor Rahm Emanuel and House Speaker Michael Madigan Monday stripped out controversial language from city pension legislation that had authorized the City Council to impose a property-tax hike, putting the stalled measure back on the fast-track at the state Capitol. […]

Madigan, D-Chicago, filed an amendment to Senate Bill 1922 after the House adjourned Monday without taking any action on the stalled legislation. Sources now expect the legislation to be voted upon as early as Tuesday.

* More

Unions had also opposed removing the property tax mandate from the bill, but City Hall is convinced labor leaders won’t object to Monday’s revisions because of language that gives the state the right to withhold state funding to Chicago during any year that the city fails to make its required contribution to municipal employees or Laborers pension funds

* To the bill

Still in the bill are two provisions to penalize the city if it does not make the pension payments. The state comptroller would be allowed to divert millions of dollars in annual state payments away from the city and into the pension funds a provision that was made stronger in the most recent version.

The proposal also spells out that pension boards could sue to get the state to divert millions in city funding to the pension funds. […]

The new plan also includes a minimum cost-of-living increase of at least 1 percent every year for retired workers who are getting pensions of $22,000 or less. The bulk of retirees would get annual increases of half the rate of inflation or 3 percent, whichever is less, based on the amount of their annual pension payments upon retirement. Currently, all retirees get 3 percent, based on their previous year’s pension income. […]

The latest version also includes a new provision that would allow Emanuel to change the makeup of the two retirement boards that oversee the laborers and municipal funds. It would terminate the terms of current members next year and allow the mayor to recommend how new members of the board should be appointed.

* A labor activist who opposes the bill sent me this commentary about that last paragraph…

Here’s what that means: The supposed “funding guarantee” in this legislation is a provision that the municipal and laborers funds may go to court if the city doesn’t pay what’s required. Now, the municipal fund’s board consists of three elected members who are employees, plus the city treasurer and comptroller. But under this provision, the entire board could be political appointees of the mayor. Besides eliminating the voice of employee participants, it could give mayoral appointees total discretion to enforce the funding provision – or look the other way.

Except the state comptroller is also required to skim city grants, and the comptroller’s office says that includes Chicago’s giant pile of revenue-sharing cash from the Local Government Distributive Fund.

* And this shows how weird some folks can get around here

To some, Quinn’s decision to draw a line in the sand on property taxes and dangle the city’s elusive quest for a Chicago casino as a replacement was part of an elaborate political dance.

Those Machiavellian theorists believe the plan for $50 million property tax hikes for each of the next five years may have been a stalking horse for a casino all along.

But the fact is, Chicago probably needs both property tax hikes and the jackpot from a land-based casino to wipe out an $32 billion unfunded pension liability that’s eight times the city’s operating revenue and, what Moody’s calls “by far the highest” of any rated U.S. local government.

That last sentence is far more in line with reality.

- Posted by Rich Miller        


21 Comments
  1. - Chi - Tuesday, Apr 8, 14 @ 10:45 am:

    “Besides eliminating the voice of employee participants, it could give mayoral appointees total discretion to enforce the funding provision – or look the other way.”

    First, a bill would need to be passed in the future to alter the current makeup of the boards; SB 1922 only requires the city to make recommendations. There is no requirement that the Legislature accept the requirements.

    Second, if trustees of the Fund, whoever they may be, “look the other way” if the City doesn’t pay what they are required by law to pay, even though they have the ability to require the City to pay, then those trustees would be sued by the members of the Fund immediately for breach of fiduciary duty. And they would clearly be guilty of that breach of duty.


  2. - Chi - Tuesday, Apr 8, 14 @ 10:46 am:

    meant to say “accept the recommendations”…


  3. - A guy... - Tuesday, Apr 8, 14 @ 10:54 am:

    Moody’s is trying to help here I gather, by establishing what the debt load really means. What Quinn called a sketch yesterday is less so today. They didn’t “color in” the sketch as much as they erased the outlines. It’s hard to tell from here what this bill does now. It doesn’t fund, but it does allow a board (maybe a board stacked with the Mayor’s shills) to hear a case from labor to sue for funds to be diverted to the pension. It gives the Comptroller the right to sweep distributions to the city and divert them into the fund. Does it compel the Comptroller to do so? It’s hard to sort out exactly what this does.


  4. - Hans Sanity - Tuesday, Apr 8, 14 @ 10:55 am:

    Denver County has an adult population of just over 400,000 and raised $2 million in revenues from cannabis tax in one month.

    Cook County’s adult population is 10 times that of Denver County.


  5. - anon - Tuesday, Apr 8, 14 @ 10:59 am:

    Agreeing to do what you are already obligated to do is sham consideration.


  6. - Name/Nickname/Anon - Tuesday, Apr 8, 14 @ 11:24 am:

    They aren’t already obligated, City is different from the state, the are meeting their statutory obligation which is insufficient in the long term.


  7. - anon - Tuesday, Apr 8, 14 @ 11:47 am:

    The Illinois Supreme Court held that there was no enforceable right to have a pension funded. The obligation is not to put money in any particular fund but to pay out the money when required. So none of this can be legally adequate consideration.


  8. - chicago worker - Tuesday, Apr 8, 14 @ 12:49 pm:

    With less than ten years solvency in these plans, more delays will simply cost somebody, everybody more money. Solutions need to come quickly with everyone involved providing a part of the solution.


  9. - anon - Tuesday, Apr 8, 14 @ 1:09 pm:

    It doesn’t matter if the fund goes “insolvent.” The City still has to pay the bill out of other revenue. Enough with the boogeyman arguments about “oh no you won’t have any pension at all if you don’t agree to just give it all away.” I’ll believe that when the legislators start spouting that same argument to its corporate debtors.


  10. - independent - Tuesday, Apr 8, 14 @ 1:33 pm:

    I continue to be amazed that supposedly smart educated adults facing such big pressing problems cannot sit down and hash out an agreement to fix these pensions and budget issues. They need to leave politics at the door and reach a compromise. Maybe we need to include labor negotiators and a federal arbitrator to coach them.


  11. - Southsider - Tuesday, Apr 8, 14 @ 1:43 pm:

    The pension boards will never be able to sue the city, as long a a vote from an ex officio member of the board is needed to bring suit. Unless the reforms change the number of votes needed, the right to sue is of no benefit.


  12. - chicago boy - Tuesday, Apr 8, 14 @ 2:39 pm:

    term limits for state reps for sure now!!!!!!!!!!!!! Lets see how they like it.See you in court.


  13. - RNUG - Tuesday, Apr 8, 14 @ 2:59 pm:

    - anon - Tuesday, Apr 8, 14 @ 11:47 am:

    Anon got it right. Until / unless the ISC says otherwise in the future, ALL government pensions in Illinois have to be paid … the only question is does the government entity pre-fund it as (more or less) required by state law or just have to “pay as you go”?


  14. - chicago boy - Tuesday, Apr 8, 14 @ 3:07 pm:

    I paid for my cola how can they take it away.


  15. - Name/Nickname/Anon - Tuesday, Apr 8, 14 @ 3:11 pm:

    Who is liable if the local fund runs out of money, the city, the state? Who will pay the retirees while it gets adjudicated? Probably no one, and after appeals probably 3+ years retirees don’t get full pensions.


  16. - funny guy - Tuesday, Apr 8, 14 @ 3:11 pm:

    Sell O’Hare Airport and fund Chicago pensions!!!! No new taxes required and the City gets to reduce its workforce. Its really that easy. Pass it on!


  17. - follies - Tuesday, Apr 8, 14 @ 3:19 pm:

    ==The latest version also includes a new provision that would allow Emanuel to change the makeup of the two retirement boards that oversee the laborers and municipal funds. It would terminate the terms of current members next year and allow the mayor to recommend how new members of the board should be appointed. ==

    The language you are talking about was removed from the bill.


  18. - TaughtThemNot - Tuesday, Apr 8, 14 @ 3:43 pm:

    Please forgive the dumb question, but why is the legislation defining City of Chicago pensions moving through the state capitol in the first place? Isn’t this a Chicago City Council issue, or does the proposal include state taxes funding the city’s municipal pensions? Sorry, I’m new to this issue.


  19. - Jack - Tuesday, Apr 8, 14 @ 5:56 pm:

    Bill passed House and Senate.


  20. - Sue - Tuesday, Apr 8, 14 @ 6:30 pm:

    A true Profile in Courage in Spring patch today- the Illinois legislature creates all of these problems then has no interest in participating in raising the revenues required to pay for the benefits which exist because the State created the funds in the first place


  21. - john - Tuesday, Apr 8, 14 @ 8:23 pm:

    They are the gutless wonders that people vote for.


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