* Press release…

In an effort to protect taxpayers, Governor Bruce Rauner today vetoed legislation that creates a five-year pension funding fiscal cliff for Chicago’s municipal and laborer pension funds that will lead to increased taxes for residents in the City of Chicago in 2023 and beyond.

“This is another kick-the-can approach to pension funding that landed Chicago in fiscal crisis in the first place,” Governor Rauner said. “This bill will create an unsustainable funding schedule that will lead to tax increases without solving the real problem.”

Collectively, Chicago’s pension funds face a combined deficit of around $30 billion. At the same time, skipped or delayed pension payments over the years have caused the state’s unfunded pension liability to balloon to $130 billion. In vetoing this legislation Friday, Rauner called on the state and all of its communities to work together on a more comprehensive approach to reform.

The action followed a morning press conference in Chicago where Rauner encouraged the General Assembly to pass a pair of bills that will deliver statewide pension reform to save taxpayers billions, while providing Chicago Public Schools with additional funding it has requested to complete the school year.

“It’s like trying to fix a drought with a drop of rain. We see pension funding challenges throughout the state – one off, short-sighted approaches won’t really fix the problem,” Rauner said. “We must have comprehensive, long-term pension reform. Let’s get it done.”

The bill passed with large veto-proof majorities, but that was during the 99th General Assembly, so it’s back to the ol’ drawing board.

* The veto message…

Today, I veto Senate Bill 2437 from the 99th General Assembly, which makes changes to the Chicago’s municipal and laborer pension funds. This legislation allows members of those pension funds hired between 2011 and 2016 to opt to pay more in employee contributions, in exchange, those members could retire at age 65, rather than 67. Additionally, it allows new members to the system to retire two years earlier while also increasing their employee contributions.

While I appreciate the effort to address the insolvency of certain pension funds for Chicago’s public employees, the legislation will create another pension funding cliff that the city does not have the ability to pay. This legislation will result in increased taxes on Chicago residents.

This veto also reflects a concern that the legislation would do nothing to address the overarching problem of underfunded pension systems throughout our State. Chicago pension funds alone face a combined deficit of around $30 billion. Our state pension funds are collectively underfunded to the tune of $130 billion. Short-term fixes like Senate Bill 2437 are not the answer and in fact are what has led to our current pension woes. This practice has to stop.

I encourage the General Assembly to pass comprehensive pension reform for our pension systems across the state and to protect our taxpayers from the rising costs of these unfunded systems.

Therefore, pursuant to Section 9(b) of Article IV of the Illinois Constitution of 1970, I hereby return Senate Bill 2437, entitled “AN ACT concerning public employee benefits”, with the foregoing objections, vetoed in its entirety. [Emphasis added.]

This was a negotiated settlement with the unions involved. And now, apparently, they’ve got to add it to the rest of the governor’s pension reform bill, which is going nowhere fast right now.

Expect vitriolic reacts in 3… 2…

*** UPDATE 1 ***  From the Senate President’s spokesman…

The Senate feared this would happen. That’s why we went ahead and passed the same plan early this session, once again with bipartisan support. Hopefully the governor will get another chance to reconsider his opposition.

*** UPDATE 2 *** From Mayor Emanuel’s spokesman Adam Collins…

“The governor continues to make one irresponsible and irrational decision after another, and his veto today is the latest example. This bill passed with overwhelming bipartisan support because it improves our fiscal stability for taxpayers and shores up pensions for thousands of retirees who earned them. Instead of helping secure the future of our taxpayers and middle-class retirees, the governor chose to hold them hostage - just as he has done to social service providers, schoolchildren and universities across the state. The governor’s actions are harming the most vulnerable in our state, and the people of Illinois deserve better.”

* Related…

* Pension battle between ‘Gov. Gridlock’ and ‘Madigan’s Mayor’?: Under the city worker pension plan, city taxpayers would contribute millions more a year to the municipal workers’ and laborers’ pension funds. To pay for the increased contributions, the City Council approved a new tax on city water and sewer service. Without acting, the Municipal Employees Pension Fund would be left with a gaping hole in 2023 — even after a utility tax is fully phased in — that would require tax increases to honor the city’s commitment to reach 90 percent funding over a 40-year period.

* Emanuel wins approval of pension bill, but Rauner may veto: Even with the already enacted tax and fee increases, the city in 2023 would have to come up with at least $278 million more a year to meet the pension funding requirements in the bill approved Monday. The Rauner administration noted that in its statement.