* Sun-Times…
Mayor Rahm Emanuel on Wednesday put in place the final piece of the pension puzzle he was elected to solve but in a way that will impose another heavy burden on Chicago homeowners reeling from rising property taxes compounded by reassessments.
To generate the $239 million over five years needed to save Chicago’s largest city employee pension fund, Emanuel wants to slap a new and quickly escalating “utility tax” on water and sewer bills over the next four years.
The plan is to start with a 7 percent tax, double it in year two, impose a 21 percent tax in year three and end at 28 percent in years four and five.
After that, the tax would rise annually to meet the “actuarially required contribution” to achieve a 90 percent funding ratio by 2057 for a Municipal Employees pension with $18.6 billion in unfunded liabilities that is due to run out of money in 2025. […]
It is expected to cost the average homeowner $4.43 more month or $53.16 a year in 2017. In the fourth year, the added tax burden will be $225.96 a year.
* ABC 7…
Last year, aldermen passed a record property tax increase to resolve shortfalls in the police and firefighter pensions and raised the cell phone tax to shore up the laborers’ retirement fund. They also tacked on a garbage pickup fee to the aforementioned water bills that were increased sharply in 2012 to rebuild mains and sewers.
“We’ve doubled the water rates historically and now we’ve added the garbage fees, so there’s a lot of frustration in our neighborhood,” said Ald. Tom Tunney (44th Ward). […]
Another reason Emanuel ruled out another city property tax increase is that the Chicago Public Schools system has been authorized to raise its levy by $250 million and is expected to do so later this month.
* And the mostly ignored reforms Emanuel is pushing…
The mayor plans to ask the General Assembly and Republican Gov. Bruce Rauner to sign off on altering the municipal fund pension system to save about $2 billion over the next 40 years. The legislative changes to the pension fund would require newly hired employees, starting next year, to increase their retirement account contributions to 11.5 percent of their salary from 8.5 percent.
Employees who were hired from 2011 to 2016 and already receive lower retirement benefits would have the option of increasing their contributions to 11.5 percent. In exchange, they would be eligible to retire at age 65 instead of 67.
But employees hired before 2011 would see no changes, after the Illinois Supreme Court struck down Emanuel’s earlier attempt to reduce their benefits, citing a constitutional clause that states their benefits shall not be diminished or impaired. “You can’t touch existing employees, that’s walled off,” Emanuel told investors.
Emanuel and affected unions have an “agreement in principle” on identical changes to the much smaller city laborers fund, with additional city contributions coming from a $1.90-per-month-increase on landline and cellphones billed to city addresses that was approved by the City Council two years ago.
- Oswego Willy - Thursday, Aug 4, 16 @ 12:54 pm:
===It is expected to cost the average homeowner $4.43 more month or $53.16 a year in 2017. In the fourth year, the added tax burden will be $225.96 a year.===
And…
===Another reason Emanuel ruled out another city property tax increase is that the Chicago Public Schools system has been authorized to raise its levy by $250 million and is expected to do so later this month.===
Math is math. It gives me no great pleasure typing that, but Chicago needs to get itself in order and Rahm is preparing to do that.
Ironically, Rahm winning and his subsequent falling star will be what Chicago needs, as Rahm can’t “get much lower” so as “Mayors Own”, Commissioner Garcia and all the “Mayoral wanna-bes” won’t own these devastating and needed revenue increases, and in 2 years, after all this pain, Chicago, fiscally, will be in a “better” place, and hopefully needed budgetary honesty might become fashionable.
The next 5 years living in Chicago will be tough.
Tough love is called that for a reason.
- Pepper Brooks - Thursday, Aug 4, 16 @ 12:59 pm:
Show me the math, Mr. Mayor. $239 million is not going to plug an $18 bil hole.
If the muni fund has an $18 bil hole in it and they are assuming 7% annual returns, that means they need $1.26 bil per year just to pay the interest on that debt.
- weltschmerz - Thursday, Aug 4, 16 @ 12:59 pm:
Anyone else notice Rahm’s silly projects keep on rolling? Schools closed and new ones built. Useless arenas aan a bloated TIF fund. “Tough love” as in tough for the taxpayers and love for Rahm’s pals.
- Crime Is Down - Thursday, Aug 4, 16 @ 1:04 pm:
Raising revenue won’t matter much with the continued wasteful spending.
- Pepper Brooks - Thursday, Aug 4, 16 @ 1:08 pm:
Raising revenue also won’t matter much if it’s impossible to raise enough revenue to fund the pensions. And it’s looking that way for Chicago.
What is Chicago currently contributing for the muni fund?
- JB13 - Thursday, Aug 4, 16 @ 1:35 pm:
“Pensions are constituionally protected. Get over it.” Print it on every utility bill.
- Almost the Weekend - Thursday, Aug 4, 16 @ 1:44 pm:
15 years from now when tier 2 elected officials are in charge I have a feeling a constitutional amendment regarding pensions will be on the ballot. Just a hunch.
- Jackie - Thursday, Aug 4, 16 @ 1:48 pm:
Cheap shots and tax hikes. What a great leader.
- phocion - Thursday, Aug 4, 16 @ 1:54 pm:
One must pay for profligate ways.
- Cheryl44 - Thursday, Aug 4, 16 @ 1:54 pm:
Maybe if he’d cash in all that TIF money he inherited…naw, we can’t do that. Too easy.
- Anonymous - Thursday, Aug 4, 16 @ 2:12 pm:
Rahm pushed hard to get Chicagoans to install water meters pledging that the metered accounts would save homeowners money and conserve water.
Classic bait and switch!
Now the water rates are going to increase and the meters are in place.
- Matt P - Thursday, Aug 4, 16 @ 2:20 pm:
Move new hires to 401(k)s.
- Anonymous - Thursday, Aug 4, 16 @ 2:23 pm:
And in a few short years, they will be out of money and there will be another round of tax increases.
- Ron - Thursday, Aug 4, 16 @ 2:25 pm:
City water rates are cheap. Even after the increase.
- blue dog dem - Thursday, Aug 4, 16 @ 2:32 pm:
Again I say. democratic leadership is punishing the working poor and middle class.
- Christopher - Thursday, Aug 4, 16 @ 2:53 pm:
Nobody’s “punishing” anyone. These are contractual agreements and the Court has ruled they must be paid. The City has enjoyed the benefits of the labor all these years, and to let it continue will mean even more money.
- BK Bro - Thursday, Aug 4, 16 @ 2:53 pm:
Good news for bondholders that signed on to some Chicago notes recently. Bad news for low income folks that struggle to pay the modest water rates that exist now.
- CrazyHorse - Thursday, Aug 4, 16 @ 3:59 pm:
==City water rates are cheap. Even after the increase.==
This. Exactly this. Rahm crippled the suburbs with outrageous water rates years ago. All of my neighbors are paying between S1000-1500 per year.
- MacombMike - Thursday, Aug 4, 16 @ 4:04 pm:
==This. Exactly this. Rahm crippled the suburbs with outrageous water rates years ago. All of my neighbors are paying between S1000-1500 per year.==
Not quite. Rahm raised the rates on EVERYONE starting in 2012 (25% increase with 15% increases in the following 3 years). The City has always charged suburbs at a higher rate as they have been allowed to do. That said, they are capped at how much more they charge the suburbs than they charge city residents.
- Federalist - Thursday, Aug 4, 16 @ 6:10 pm:
@JB13 - Thursday, Aug 4, 16 @ 1:35 pm:
“Pensions are constituionally protected. Get over it.” Print it on every utility bill.
At the local government level they are not protected, although those already retired might have a good case but it would have to go to SCOTUS.
Local governments can change pensions at the end of a contract. They can also declare bankruptcy and really muck things up.
States can not declare bankruptcy but they can change at the end of a contract. Illinois is a little different because of our Constitution. Thus, only new employees can be affected.
- RNUG - Thursday, Aug 4, 16 @ 8:44 pm:
-Federalist-
You are wrong about that in Illinois. The bulk of IL pension protection law is from local cases. Local municipalities can’t declare bankruptcy without explicit permission from the General Assembly. A government pension in Illinois is as close to a sure thing as you can get.
- Jerry in Chicago - Thursday, Aug 4, 16 @ 8:50 pm:
We wouldn’t want to legalize pot, gambling, and fun in order to pay our bills at some, would we?
- fly on the wall - Thursday, Aug 4, 16 @ 10:03 pm:
Why all the wining, this is what Cook County Democrats do.
- blue dog dem - Thursday, Aug 4, 16 @ 10:05 pm:
How do we change that ‘pesky’ constitution thing?
- Ron - Thursday, Aug 4, 16 @ 10:48 pm:
Just stop giving raises to the coddled state workers. That will at least stop their pensions from growing more obscene.