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Preckwinkle: Rauner wants omnibus bill before helping Cook County

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(A) House panel advanced Cook County Board President Toni Preckwinkle’s plan to overhaul government worker pensions.

The proposal would cut benefits and raise retirement ages but also guarantee health care benefits for workers when they retire. It calls for the county to put almost $147 million more a year into the pension fund, though Preckwinkle continues to be publicly vague about how she’ll fund that increase.

But prospects for the bill to move forward are shaky amid opposition from Republicans leery of a tax hike that likely would fund the county’s increased contributions and some Democrats who don’t like that some powerful employee unions are opposed. Still, Preckwinkle said she remained “hopeful” that Rauner may support the bill and pressure Republicans to vote in favor.

* The Bond Buyer …

In reviving the legislation, Preckwinkle argues that the county’s liabilities are rising by $30 million a month and a reform bill needs to be passed “immediately.”

The county’s proposal would withstand a legal challenge in part because, like Chicago, the county is not relying on the ‘police powers’ argument that the state used to defend its reforms, Preckwinkle said.

The county’s plan would also offer employees something they don’t have now - a dedicated revenue source for health care benefits, according to the county.

“Our plan, which was the product of over two years of negotiations with a cross section of unions and stakeholders, also confers on participants significant new value in return for changes in the pension system,” Preckwinkle said in a statement.

* The Tribune wants it passed…

Is there any point after the Supreme Court slapdown? The city and the county say their proposals could thread the eye of the needle at the Supreme Court, though the odds seem to be against them.

The Supreme Court took dead aim at the state’s self-inflicted pension crisis. Cook County argues that it, unlike state government, has always made its legally required pension contribution. County officials believe that and other differences would prompt the court to give this legislation a fresh look.

We encourage Illinois lawmakers to pass Preckwinkle’s pension bill. Get it to Gov. Bruce Rauner’s desk. It may be a stand-alone reform or it may become part of a grand bargain to save state and local government from financial catastrophe. But let’s get it passed.

* But the governor has other ideas…

Preckwinkle says she recently had an “interesting” conversation with Republican Governor Bruce Rauner last week and says the ball’s in his court.

Preckwinkle says Rauner wants a package of pension bills to pass as the state, City of Chicago, Cook County, and several suburbs look to restructure their retirement benefits. A spokesman for Rauner had no comment.

It’s May 21st. Ten days to go. The budget process is in shambles and now he won’t approve Cook County’s bill until he gets a giant ominibus reform bill?

Could be a long summer.

* Meanwhile, from Reuters…

Chicago could reduce a looming $550 million hike in contributions to its police and fire retirement systems due next year by extending the deadline for reaching a 90-percent funded level, the city disclosed in bond documents on Thursday.

The city laid out options for dealing with the payment in documents relating to its plan to convert about $805 million of variable-rate debt into fixed-rate bonds to avoid accelerated debt payments and termination fees to banks. […]

Under a 2010 Illinois law, Chicago’s annual contributions must be in an amount that would enable the retirement systems to be 90 percent funded by 2040. The city said it was in talks with unions to amend the law to extend the 2040 deadline and create a phase-in period to reduce contributions in initial years.

Chicago has projected that contributions to all four of its retirement systems will climb to $1.1 billion next year from about $478 million this year. […]

In the absence of payment relief from the legislature, Chicago may have to increase its property tax levy by Dec. 29 to accommodate the full $550 million police and fire contribution, the documents added.

* And the mayor is most certainly optimistic…

Mayor Rahm Emanuel said Wednesday he wants to see how the frenzied final days of the Illinois General Assembly’s spring session play out before asking the new City Council to begin the search for new revenue to solve the $30 billion pension crisis that has dropped Chicago’s bond rating to junk status.

“We’re in active discussions on a casino as a funding source to shore up” police and fire pensions, the mayor told reporters after a City Council meeting. […]

Emanuel said he remains hopeful on what he once described as a “mega, mega-deal” that may include a sales tax on services, partial restoration of the expired increase in the state income tax, a Chicago casino and pension relief for police and fire and Chicago teachers.

“We’re now in the final two weeks before the end of the session. And as you know, this is usually the time — not just in Springfield, but with legislative bodies [everywhere] — when days are weeks and weeks are like months,” he said.

“There will be a lot of activity. I’m gonna be out there pressing the issues that are related to Chicago and its future [to make certain] Springfield does not make decisions at the expense of Chicago because there’s not a healthy Illinois without a healthy Chicago,” Emanuel said.

I’m not seeing it, and hizzoner is the only upbeat guy on this particular topic right now. Maybe it’ll happen. Lot of movement needed, though.

* One more mayoral item…

He said he would much rather see a Chicago casino close to a convention and entertainment area, which people could avoid if they’re against gambling, than to see a video poker machine in scores of bars across Chicago.

I dunno. Why not put money in the pockets of scores of hard-working bar owners around the city rather than concentrate it into the hands of already wealthy casino interests?

* And Mark Brown looks at another option for funds other than those serving police and firefighters…

Illinois law defines pension benefit payments as obligations of the pension funds, which are separate legal entities from the city, Moody’s noted.

“But if the pension funds are unable to fulfill these obligations, it is unclear which party will be responsible for paying annuitants,” Moody’s said.

The city’s position is that it would be legally required to make retirement payments to police and firefighters if their pension funds become insolvent, but not those covered by the municipal employees and laborers funds — unless the city’s pension reform law is upheld by the courts. […]

The municipal and laborers funds are projected to go belly up in 10 years to 12 years without a revenue infusion. The firefighters fund, which is in worse shape, could be insolvent in half that time.

At the point the city has to start directly paying its retirees, taking away money needed to provide city services, nobody will be doubting this pension crisis is real and affects everyone.

posted by Rich Miller
Thursday, May 21, 15 @ 1:25 pm

Comments

Ahh, the classic “make perfect the enemy of good” strategy

Comment by McDouble Thursday, May 21, 15 @ 1:35 pm
Could be a long ~~summer~~fall.

==Why not put money in the pockets of scores of hard-working bar owners around the city rather than concentrate it into the hands of already wealthy casino interests?==

Because Emanuel is a tool of wealthy corporate interests, not the working and middle class.

Comment by Precinct Captain Thursday, May 21, 15 @ 1:41 pm
He said he would much rather see a Chicago casino close to a convention and entertainment area, which people could avoid if they’re against gambling, than to see a video poker machine in scores of bars across Chicago.

Well you know, people can in fact avoid bars…

Comment by OneMan Thursday, May 21, 15 @ 1:47 pm
Reform should be done across the board, not this piecemeal crap. I agree with the Governor.

Comment by Tone Thursday, May 21, 15 @ 1:59 pm
When are these politicians going to get this, the benefits in place the day you are hired are the benefits due you when you retire.
The ISC just ruled, and Article XIII, Sect. 5, states:
Membership in any pension or retirement system of the
State, any unit of local government or school district, or
any agency or instrumentality thereof, shall be an
enforceable contractual relationship, the benefits of which
shall not be diminished or impaired.
(Source: Illinois Constitution.)

Let’s stop wasting time chasing windmills, let’s put together a painful but reasonable package of tax increases, budget cuts and full actuarially payments to the pension systems. Once we do this as a State, the bond ratings should improve and in 5 to 10 years this should all be behind us.

Comment by Frank Ambrose Thursday, May 21, 15 @ 2:06 pm
Frank, the problem is we will need to tax people to death. Illinois is losing population already. Cuts are a must.

Comment by Tone Thursday, May 21, 15 @ 2:08 pm
- Tone -,

How do you put up with those New York taxes?

Comment by Oswego Willy Thursday, May 21, 15 @ 2:18 pm
Tone - A combination is what I suggested, as a State we “survived” the temporary tax increase that was just allowed to expire. Big mistake, IMHO, should have been left in place so the focus could have been just on cuts, now focus will be divided between cuts and taxes. Provides our elected politicians a chance to bait and switch

Comment by Frank Ambrose Thursday, May 21, 15 @ 2:19 pm
@2:08 =the problem is we will need to tax people to death.=

Taxes are lower for homeowners in Chicago and Cook county then the collar counties. I don’t see why they could not raise the property tax to cover at least some of the pension fund payments.

Comment by DuPage Thursday, May 21, 15 @ 2:21 pm
Agreed Tone! One cut that is mandatory is Welfare for the Wealthy.

For instance I know of this guy Bruce who makes way more money than I do….but I pay a higher percentage of money in taxes.

Comment by Jack Stephens Thursday, May 21, 15 @ 2:22 pm
OW- but he knows about people leaving Illinois since he had to flee to China to avoid our terrible tax climate.

Comment by Juice Thursday, May 21, 15 @ 2:24 pm
Rauner’s approach of putting all the pension bills together would be great. It would let the Supreme Court to just issue one opinion for all of them and move on with the inevitable increases in revenue or cuts.

Comment by John Parnell Thursday, May 21, 15 @ 2:26 pm
I will say this about - Tone -, the “get off my lawn” mentality should be a reminder that these are adult problems. Rationalizing in a manner that has no solutions becomes more glaring as the days wind down.

- Juice -, I’m hoping for South America next. It’s a small world after all…

Comment by Oswego Willy Thursday, May 21, 15 @ 2:29 pm
=== - Tone -,

How do you put up with those New York taxes? ===

Willy, Rauner contracts pay well!

Comment by Norseman Thursday, May 21, 15 @ 2:43 pm
Anybody who reads the newspaper knows that Illinois needs to raise taxes and cut services. Isn’t the damage already done? If I were planning on leaving the state to avoid tax increases, I’d be headed out already. The last ones to leave are going to be trying to sell their houses when nobody is buying, etc.

In short, the damage from flight is probably already substantially done or in the works. An actual fix to the problem (i.e., a budget that has lower spending and higher revenue and rights the ship in a decade or even two) might actually make people more willing to stay rather than less.

Comment by Mostly Harmless Thursday, May 21, 15 @ 2:44 pm
For current employees, the County plan imposes cuts which are significantly more severe than those struck down in SB1. Does anyone think the argument that I took away your dinner but tossed you back a crumb is going to fly in the courts?

Comment by anon Thursday, May 21, 15 @ 2:45 pm
I live in Chicago Norseman.

Comment by Tone Thursday, May 21, 15 @ 2:48 pm
Cook County Commissioner Larry Suffredin has another good point on his website about the problem created by a pension law which imposes such disparate treatment based on whether a person is retired or is a current employee: ” Besides the Pension payment issue the other looming problem is that any changes in the pension law will cause significant increases in retirements. It is estimated that up to 1500 employees in the health system and 500 employees in the Sheriff’s Office would retire the day any County pension bill passes the General Assembly. There is no plan in this budget to deal with these massive retirements. Any change at the Health System and Sheriff’s office staffing puts the County at financial risk for not meeting minimum staffing requirements under Court orders and federal rules.”

Comment by Anonymous Thursday, May 21, 15 @ 2:51 pm
- Norseman -, my bad.

That “superstars” pay grade, I keep forgetting…

Comment by Oswego Willy Thursday, May 21, 15 @ 2:52 pm
“It would let the Supreme Court to just issue one opinion for all of them and move on with the inevitable increases in revenue or cuts.” What part of the no diminishment means no diminishment language in the opinion just released did you not understand?

Comment by Anonymous Thursday, May 21, 15 @ 3:02 pm
On the leverage scale, who’s pile does this get filed over to?

Comment by A guy Thursday, May 21, 15 @ 3:20 pm
Tone may by deaf to the facts. Changing or reducing pensions does little to solve the financial issues facing the state today or for thousands of tomorrows.

The simple fact is that it does not eliminate the current debt level and only moderately changes the annual cost.

Cost shift saves $1.8-$2.0 billion. That leaves the state responsible for paying $5.6-$5.8 billion toward the debt. There is not getting around it. Period.

Comment by JS Mill Thursday, May 21, 15 @ 3:23 pm
== Reform should be done across the board, not this piecemeal crap. I agree with the Governor. ==

Each pension system has different terms, rules and conditions. You can’t take a one size fits all approach or it will positively be ruled unconstitutional. Not that the current proposal will pass muster either.

Comment by RNUG Thursday, May 21, 15 @ 3:40 pm
==Reform should be done across the board, not this piecemeal crap. I agree with the Governor.==

And that’s also why when we get sick, we should demand that if our doctor expects us to keep hiring him, he’ll give us something to completely cure us of everything that’s wrong that very instant.

Comment by OldSmoky2 Thursday, May 21, 15 @ 3:48 pm
“- Anonymous - Thursday, May 21, 15 @ 3:02 pm:

What part of the no diminishment means no diminishment language in the opinion just released did you not understand?” Apparently you don’t read much. The Court can bundle the issues and rule that Precwinkles plan and the others will be treated the same as the SC previous opinion on retirees! No wonder you are anonymous.

Comment by John Parnell Thursday, May 21, 15 @ 4:09 pm
My point is that litigating the constitutionality of this plan is a massive waste of time when there is no reasonable basis to distinguish Preckwinkle’s diminishment from SB1’s diminishment. Indulging in the farce that we don’t know what to do until the Court rules expired on May 8, 2015. Now it’s just frivolous. Unnecessary court costs for the taxpayers and other parties, pointless delay on finding revenue and a lot of stress for those employees under attack.

Comment by Anonymous Thursday, May 21, 15 @ 4:26 pm
== My point is that litigating the constitutionality of this plan is a massive waste of time ==

I agree … but the political process may require this to happen again before everyone gets the message.

Comment by RNUG Thursday, May 21, 15 @ 5:16 pm
Are they that dumb or just in denial?

Comment by Anonymous Thursday, May 21, 15 @ 5:36 pm
“- Anonymous - Thursday, May 21, 15 @ 4:26 pm:That was the point I made twice, but I was able to use fewer words. The Preckwinkel proposal will go before a Federal Court. Preckwinkel has a lot of hubris to think that she can “thread the needle” where all others have failed.

Comment by John Parnell Thursday, May 21, 15 @ 5:37 pm
Just in fear they won’t get re-elected after raising taxes

Comment by RNUG Thursday, May 21, 15 @ 5:38 pm
== The Preckwinkel proposal will go before a Federal Court. ==

??? Unless I missed something, it should end up in the State court system and the IL SC.

Comment by RNUG Thursday, May 21, 15 @ 5:43 pm
Once again-Chicago is looking to kick the can further down the road and postpone confronting its obligations. Why not just default and force the issues once and for all. The money required exceeds the City’s taxing abilities so why not get the unions to cut a deal. If they refuse-let the parties deal with a restructuring-where this belongs-bankruptcy court

Comment by Sue Thursday, May 21, 15 @ 7:05 pm
@Sue 7:05 =The money required exceeds the City’s taxing abilities=

The city can raise their own taxes. Rahm just does not WANT to raise taxes for political reasons.

Comment by DuPage Thursday, May 21, 15 @ 9:29 pm
Sue - Thursday, May 21, 15 @ 7:05 pm:

Once again-Chicago is looking to kick the can further down the road and postpone confronting its obligations. Why not just default and force the issues once and for all. The money required exceeds the City’s taxing abilities so why not get the unions to cut a deal. If they refuse-let the parties deal with a restructuring-where this belongs-bankruptcy court

I will not comment on your bankruptcy comment… but (unless I am mistaken) you are incorrect about the ability of the unions to actually negotiate this. (Yeah, I know — efforts have been made, and I respect that fact.) But, if even one single pensioner or future pensioner feels that his rights have been violated, and his pension has been compromised, then that person can sue, and will (most probably) win — in the end.
If I am wrong, here, I apologize. I do know this is the case when it comes to state pensioners, though — where the pensions are actually beyond the unions’ ability to even negotiate.
Is it not still a contract between the worker and the employee? Or, am I missing something?

- Justan

Comment by Justan Observer Thursday, May 21, 15 @ 9:42 pm
== If they refuse-let the parties deal with a restructuring-where this belongs-bankruptcy court ==

In Illinois, governmental units, including cites, are not allowed to use bankruptcy.

Comment by RNUG Thursday, May 21, 15 @ 9:57 pm
== Is it not still a contract between the worker and the employee? ==

That’s what the IL SC says … and theirs is the only opinion that counts.

Comment by RNUG Thursday, May 21, 15 @ 9:58 pm
== If they refuse-let the parties deal with a restructuring-where this belongs-bankruptcy court ==

Adding, in other states where bankruptcy is allowed by cities, the retirees and employees walked away with between 90% and 96% of their pensions intact. It was the bond holders who lost big time. And that includes Detroit …

Comment by RNUG Thursday, May 21, 15 @ 10:01 pm
“He said he would much rather see a Chicago casino close to a convention and entertainment area”

They should just sell off Meigs Field and make our own little Vegas strip. Pavilion is right there, lakefront, primo location.

Comment by Goon Hammer Thursday, May 21, 15 @ 10:02 pm
—- If I were planning on leaving the state to avoid tax increases, I’d be headed out already. The last ones to leave are going to be trying to sell their houses when nobody is buying, etc.

According to rational expectations arguments by Milton Friedman and the Chicago School. Yes.

Comment by Archpundit Thursday, May 21, 15 @ 10:38 pm
.—He said he would much rather see a Chicago casino close to a convention and entertainment area, which people could avoid if they’re against gambling, than to see a video poker machine in scores of bars across Chicago.

What is more entertaining than a corner bar?

Comment by Archpundit Thursday, May 21, 15 @ 10:40 pm
And the Bankruptcy Court is a Federal Court .

Comment by John Parnell Friday, May 22, 15 @ 9:27 am