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The city of Chicago borrowed $220 million for a police and fire pension payment due by the end of the year.
The city took out the loan with a 3 percent interest rate in order to have the pension funds ready by a state-mandated March 1 deadline, officials said Monday.
Chicago Mayor Rahm Emanuel’s 2016 budget included a $588 million property tax hike for police and fire pensions and school construction. Still, the mayor’s spending plan depends on the state for pension funding changes, which have cleared both legislative chambers but have not yet been sent to Republican Gov. Bruce Rauner. The governor has called for the Chicago pension to bill to be included “as part of a larger package of structural reform bills.”
The pension funding changes would give the city more time to make its pension payments, cutting pension costs due this year by $219 million.
* And hope is not a plan…
Although the state House and Senate, both controlled by Democrats, approved the bill, they have not sent it to the governor for fear he’ll veto it if they don’t sign on to his pro-business, union-weakening agenda. The governor’s spokesman has said Rauner would sign the bill only “as part of a larger package of structural reform bills.”
That’s the Rauner administration’s alternate phrase for the governor’s “turnaround agenda,” which the Democrat-controlled General Assembly has rejected, keeping the state from approving a budget for more than eight months now.
And there’s no end in sight to that stalemate, given that last week’s primary elections did not change the state’s partisan political landscape despite the record amounts of money spent on some General Assembly contests.
Nevertheless, Holt expressed optimism the governor will eventually sign the bill. “We still believe the (police and fire pension bill) is consistent with what the governor believes needs to happen with pensions,” she said. “I think there are a lot of reasons it’s consistent with his view and we don’t see any reason he wouldn’t sign it.”
posted by Rich Miller
Wednesday, Mar 23, 16 @ 10:39 am
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–And hope is not a plan…–
No, it’s not. Emanuel can not possibly to be so naive as to think Rauner would not want something in return.
But is Rauner so naive as to think that Emanuel has real clout in the General Assembly?
Comment by wordslinger Wednesday, Mar 23, 16 @ 10:42 am
“I think there are a lot of reasons it’s consistent with his view and we don’t see any reason he wouldn’t sign it.”
Because it doesn’t eliminate collective bargaining and prevailing wage,that’s why he won’t sign it. Governor One Trick Pony has one and only one agenda and if he doesn’t get his way, we all suffer.
Comment by Gruntled University Employee Wednesday, Mar 23, 16 @ 10:52 am
Well, after the Illinois Supreme Court hands down their Chicago pension decision on Thursday, will see what everyone says in light of that.
Comment by Archiesmom Wednesday, Mar 23, 16 @ 11:04 am
With Bruce Rauner as governor, we are all living on borrowed time.
Comment by VanillaMan Wednesday, Mar 23, 16 @ 11:05 am
No poison pill equals no signature from the governor.
Comment by Mama Wednesday, Mar 23, 16 @ 11:06 am
Does anyone think there will ever be a budget in this state until 2018?
Comment by Dr X Wednesday, Mar 23, 16 @ 11:11 am
What “pro-business” agenda?!?!???? He slams Illinois every chance he gets. We did not find ourselves a cheerleader in this one.
Comment by RIJ Wednesday, Mar 23, 16 @ 11:23 am
- “keeping the state from approving a budget for more than eight months now.”
No that’s not the reason. The reason is Rauner has refused to do his constitutionally required duty of presenting a balanced budget to the General Assembly for their approval for two years now.
- Pro-business agenda
None of Rauner’s turnaround agenda items will ultimately help the vast majority of Illinois businesses.
These agenda items are only focused on cutting workers constitutional rights of association and representation by a Union.
Rauner vehemently hates unions and everything he does revolves around that premise.
Comment by Chicago 20 Wednesday, Mar 23, 16 @ 11:37 am
The Chicago metro private sector apparently likes Rauner. Job growth was the fastest in 2015 since 1990 with exception of 1 year.
Comment by Tone Wednesday, Mar 23, 16 @ 11:43 am
- Dr X - Wednesday, Mar 23, 16 @ 11:11 am:
IL Rs lose badly in November, budget in early 2017. Unless enough of the Rs grow a spine before then.
Comment by Jimmy H Wednesday, Mar 23, 16 @ 11:43 am
Indi ana has found itself a cheerleader, he is always bashing their neighbor. Ooo they think they have found themselves a cheerleader…
Comment by Me too Wednesday, Mar 23, 16 @ 11:47 am
wordslinger, does that mean you think it’s up to Madigan to deliver something to save the city?
If Emanuel has no clout in the GA, and Rauner is content to let Chicago Democrats dig their way out of this hole they created via city tax increases and cuts, who steps up to offer something of value in exchange for additional state aid to the city?
Comment by Anonymous Wednesday, Mar 23, 16 @ 11:59 am
Chicago is Borrowing 220 million for police and fire pensions. CPS is short 500 million dollars for pensions. Chicago property taxes increased by record amounts this year. CTU blames Governor Rauner???The most powerful democrats on Illinois Madigan and Cullerton are strangely silent. Anyone care to guess why reform is needed?
No way this can go unresolved until after the next election.
Comment by Lucky Pierre Wednesday, Mar 23, 16 @ 12:07 pm
….and just wait til life expectancies are increased by three years.
Comment by Blue dog dem Wednesday, Mar 23, 16 @ 1:10 pm
It’s not hyperbole at this point to state that the point of no return has been passed on Chicago’s fiscal stability. The City Council had a chance to raise enough revenue to bring the city, at least, to a sustainable budget level. They blew it, in part because the Mayor told them to blow it.
There isn’t any spinning this. When a city draws down a short term credit line for its operating budget it’s gone. The only thing that remains to be seen is how long the city’s lurch through insolvency is going to last and how badly its elected officials will manage it.
Comment by Will Caskey Wednesday, Mar 23, 16 @ 1:15 pm
The best way for the City of Chicago to cut pension costs is to not barrow money to fund the pension (avoids interest costs) and not to go to court in an attempt to change the pension plans provisions after the fact (avoids legal costs). Chicago just needs to increase taxes and pay the full amount due to the pension plans. The city agreed on certain pension plan conditions, all they need to do now is keep up their end of the bargain by paying the amount due.
Comment by Hit or Miss Wednesday, Mar 23, 16 @ 1:53 pm
“The pension funding changes would give the city more time to make its pension payments, cutting pension costs due this year by $219 million.”
Not exactly, it would defer payments due, but only by increasing later payments.
It is just another form of borrowing, expensive borrowing at that.
Comment by Any Mouse Wednesday, Mar 23, 16 @ 2:59 pm
Hit or Miss,
Didn’t Chicago just raise the taxes a record amount? You are advocating for another tax increase on top of the one just made? I wonder how high the taxes need to be in order to make the budget sustainable for a couple years. I’m betting crazy high.
Comment by Maximus Wednesday, Mar 23, 16 @ 3:25 pm
Chicago finance 101: You borrow X money at 9% to pay off Y dollars we owed at 4%, we save 5%. See how easy the math is.
Comment by NothsideNoMore Wednesday, Mar 23, 16 @ 9:35 pm