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* What jumped out at me about this breathless Tribune editorial is the lack of actual numbers…

Chicago taxpayers, prepare for another kick in the teeth. In fact, it might be a good time to grow fond of the toothless grin. Another recent court decision will put taxpayers on the hook for additional city pension debts. Yes, even more than before.

A circuit court judge in March struck down a 2014 state law that eased pressure on the pension fund of Chicago Park District retirees. The law had increased Park District employees’ own contributions to the fund, increased their retirement-eligible age, reduced their annual cost-of-living increases and reduced duty disability benefits. But those changes will be rolled back, due to the ruling.

That means the Park District — you, taxpayers — will have to come up with reimbursements for workers’ higher contributions, plus interest.

* Actually, as Greg Hinz notes, property taxes will go down for now…

[Circuit Court Judge Neil Cohen ordered] that the park district property-tax levy return to its prior, lower level. The pension fund will keep the $25 million in one-time payments that were made by the district, as well as about $20 million in higher property taxes that already had been levied.

* The deal struck in late 2013 gradually increased worker pension contributions. From the statute…

Beginning January 1, 2015, the deduction shall be 8% of salary [up from 7%]. Beginning January 1, 2017, the deduction shall be 9% of salary. Beginning January 1, 2019, the deduction shall be 10% of salary.

* The district’s latest budget claims that 32 percent of spending was on salaries and wages, which equals about $148 million. Let’s use that number (although it’s undoubtedly higher) for all years just so I don’t have to spend all day on the calculator.

One percent of annual payroll would be about $1.5 million, so 2015’s and 2016’s one-point deduction would total $3 million over two years. The grand total would rise to $6 million by the end of 2018, when another two points were deducted. Let’s say it’s another $1 million for the first few months of this year. That’s $7 million, plus the court-ordered 3 percent interest of about a quarter million. $7 million is 1.5 percent of the park district’s current budget. Plus, the district will have to come up with $3 million a year going forward to make up for the reduced contributions.

The judge also ordered the district to cover reduced disability payments. But that’s pretty minor because payments were reduced from 75 percent of salary to 74 for two years and then to 73 last year.

* The more worrisome aspect of this issue is found in a November 2013 Crain’s story…

Action is needed because, at the end of fiscal 2011, the retirement system had just 58 percent of the assets needed to pay promised benefits

That asset ratio is now down to 39 percent, even with the extra cash.

posted by Rich Miller
Wednesday, Apr 4, 18 @ 10:44 am

Comments

Just following the precedent of the SB-1 ruling: pensions are individual contracts; changes can’t be negotiated away by a third party or involuntarily imposed.

Comment by RNUG Wednesday, Apr 4, 18 @ 10:51 am
Chicago could be like NYC, Philadelphia , and Baltimore and tax income. Chicago residents aren’t against paying higher taxes. Yeah, the state legislature would have to approve it before the aldermen voted on it but… many in Chicago wouldn’t mind.

Comment by Steve Wednesday, Apr 4, 18 @ 10:51 am
Rich- no way to look at this as other then bad news. One and only successful attempt to negotiate done cost savings and it is tossed out. Regardless of what most of the folks on this blog want to believe- neither the state or the local givers can ever raise taxes enough to fully pay all of the benefits our politicians have promised the public sector in exchange for their votes and contributions. This is why the Supreme Court will be issuing its union membership decision in June. The majority recognize that the public sector unions in many jurisdictions run the show

Comment by Sue Wednesday, Apr 4, 18 @ 10:54 am
===Rich- no way to look at this as other then bad news===

It’s not good news. But a $3 million annual budget hit isn’t the end of the world.

Comment by Rich Miller Wednesday, Apr 4, 18 @ 10:56 am
-Sue-
What the U.S. Supreme Court decides will not effect Illinois much. The Illinois state constitution is what is unless that public pension provision is changed…

Comment by Steve Wednesday, Apr 4, 18 @ 10:57 am
===unless that public pension provision is changed===

And that won’t do much about the current unfunded liability, which is the problem.

Comment by Rich Miller Wednesday, Apr 4, 18 @ 11:01 am
Rich is correct. Illinois has a current and future public pension problem. Although, unless the state constitution provision is amended not much can happen on the cost side.

Comment by Steve Wednesday, Apr 4, 18 @ 11:03 am
The troncs also wrote the other day that “Illinois must change or die.” So, be on the lookout for that.

Now the longtime tenants of Prudential Plaza know where that omnipresent stench of burning hair came from suddenly.

Comment by wordslinger Wednesday, Apr 4, 18 @ 11:04 am
Katrina & her Tribbie cabal’s conclusion is generally mushy. They fail to admit that the court decision means the government and the workers cannot surrender their existing pension plans. Period. So go find a way to fund it.
It also mean amending the Constitution does not wipe out the zillions owed.
Good luck.

Comment by Annonin' Wednesday, Apr 4, 18 @ 11:16 am
=Rich is correct. Illinois has a current and future public pension problem. Although, unless the state constitution provision is amended not much can happen on the cost side.=
What on earth does this stream of semi-consciousness mean?

Comment by Deadbeat Conservative -often blocked Wednesday, Apr 4, 18 @ 11:17 am
Sue I hate to ruin your troll vibe but Janus won’t have much of an effect. Public sector employees know now more than ever, thanks to Rauner, that management is out to take away pay, healthcare and pensions. Rauner the Labor Uniter. He has brought us together like nobody could. Janus is nullified if nobody leaves the union…and thanks to Bruce, nobody would risk being without the union. History will show Janus as The error that turned the tide against corporate/oligarchic control and manipulation. So keep it up Sue. You’re only proving our argument.

Comment by Honeybear Wednesday, Apr 4, 18 @ 11:22 am
What is rarely discussed is the benefits the tax payers received for decades at an artificially low cost. Services were delivered in return for compensation in the form of salaries, insurance covereage, pensions, etc. The taxpayers received the services rendered but they were also benefiting (at least in the short term) by deferring the cost of some of compensation which allowed lower taxes.

How much did the Trib editorialize about the fiscal irresponsibility of deferring those costs? Did they ever complain that taxes were too low?

Comment by Pot calling kettle Wednesday, Apr 4, 18 @ 11:24 am
So, while the entire Chicago Park District gets a $3 million hit to the budget, this happens: https://twitter.com/CrainsChicago/status/981567214548652033

The fight isn’t among common citizens, it is the wealthy hoarding more money for themselves and making the majority of us fight over how to spend the scraps.

Comment by Anon Wednesday, Apr 4, 18 @ 11:33 am
This editorial combined with the one last week on Chicago teachers’ pension is really mind-numbingly awful editorial writing. Neither has a purpose other than generating outrage for outrage sake. But the board has completely failed at actually articulating what kind of changes it would like to see beyond its readership being angered and depressed.

On CTPF, the outrage was that the board decided to lower the assumed rate of return. This is a change that tronc has been pushing for years, and when it happens? Argh(exclamation) You should be angry(many exclamations)

On the park district, they harp about the evil cabal of unions and democratic elected officials not being willing to address some legitimate challenges that we have. Yet this was a bill that the unions agreed to while negotiation with local democratic elected and appointed officials, and enacted into law by a democratic controlled general assembly and signed by a democratic governor. The courts tossed this proposal, as is their wont in a system of checks and balances. Argh(exclamation) Not angry yet? Now be angry(many exclamations).

It is naval gazing in the absolute worst kind of way and is the type of attitude that has allowed elected officials in both parties over multiple decades get away with lying to the electorate about what the problems are that we actual face and realistic ways in which we can deal with the,

Comment by Juice Wednesday, Apr 4, 18 @ 11:36 am
- Anon - Wednesday, Apr 4, 18 @ 11:33 am:

So, while the entire Chicago Park District gets a $3 million hit to the budget, this happens: https://twitter.com/CrainsChicago/status/981567214548652033

The fight isn’t among common citizens, it is the wealthy hoarding more money for themselves and making the majority of us fight over how to spend the scraps.

You are free to go work for a Chicago based Real Estate Investment trust and also make big money. Thats what we are all about - choice.

Comment by allknowingmasterofracoondom Wednesday, Apr 4, 18 @ 11:42 am
Pot calling kettle,

I’ve actually wondered this too and done some deep dives into the Chicago Tribune archives on this subject.

The short answer is the Tribbies did editorialize at times against failures to fund state pensions. But they had an amazing blind spot (in retrospect) at ever criticizing Mayor Daley for not raising taxes to help fund the growing shortages in the city pension funds, especially teacher pensions.

Look back at all of the Tribune editorials endorsing Mayor Daley for reelection, you’ll find nary a word about the pension diversions. Instead the Trib seemed way more concerned about something called “hired trucks.” That was the real concern of the day.

Comment by ZC Wednesday, Apr 4, 18 @ 11:43 am
No the taxpayers did not benefit from artificially low taxes as the State Politicians deceived the ones that weren’t paying attention that they weren’t truly passing balanced budgets all those years because they weren’t paying the true cost of the pensions and putting back anything for retiree healthcare but were buying the votes(with IOU’s) of those that were going to receive the pensions that they(politicians) weren’t funding in the budgets. We the taxpayers didn’t get any extra services for bad pension system decisions as contracts should have been negotiated that fell into the true cost of what was budgeted. We will have far higher taxes for less service in the future because of the past politicians of both parties shenanigans and vote buying.

Comment by Stand Tall Wednesday, Apr 4, 18 @ 11:45 am
-allknowingmaster

By this logic, then I assume you feel that teachers are underpaid? And that those that complain teachers are overpaid because they get awesome pensions and easy work hours (which are both false, by the way), could have chosen to go into teaching if they wanted, and therefore those people aren’t qualified to have an opinion about it?

Comment by Anon Wednesday, Apr 4, 18 @ 11:51 am
A lack of actual numbers — and a lack of realistic solutions from the Trib.

Cut other services to fund pensions? Legal but politically difficult. Amend the state constitution and remove the impairment clause? The contract clause in the federal constitution would likely protect retirees and current employees. Good luck amending that.

The Tribsters can stomp their feet all they want, there’s just no easy way out of this. At least one editorial board has come to terms with this:

http://www.news-gazette.com/opinion/editorials/2018-04-04/editorial-problem-without-solution.html

Comment by Roman Wednesday, Apr 4, 18 @ 11:52 am
===We the taxpayers didn’t get any extra services for bad pension system decisions===

Did you just fall off the turnip truck?

They didn’t spend money on pension obligations precisely because they wanted to spend money on other programs.

Comment by Rich Miller Wednesday, Apr 4, 18 @ 11:56 am
I support the unions and their pensions too but yes it sometimes bothers me, the “theft” line. It’s not like all the pension diversions were going into the politicians’ pockets.

And yes, some of the “stolen” pension diversions were being used to then fund … higher teacher / union salaries and pay raises. A little bit more complicated than “theft.”

Comment by ZC Wednesday, Apr 4, 18 @ 12:10 pm
ZC -
At one time (1997) the Tribbies supported Jim Edgar’s pension actions.
http://articles.chicagotribune.com/1997-08-21/news/9708210073_1_jim-edgar-state-welfare-reform

Comment by Anyone Remember Wednesday, Apr 4, 18 @ 12:16 pm
==Chicago could be like NYC, Philadelphia , and Baltimore and tax income. ==

Those places have an effective property tax rates 1/3 to 1/2 lower than Chicago.

Comment by City Zen Wednesday, Apr 4, 18 @ 12:17 pm
==Chicago could be like NYC, Philadelphia , and Baltimore and tax income. Chicago residents aren’t against paying higher taxes. Yeah, the state legislature would have to approve it before the aldermen voted on it but… many in Chicago wouldn’t mind.==

You’d have to change the Illinois Constitution first.

Then the question is–what’s the rate? All those cities listed have income taxes of 3-4%. Let’s say we impose a progressive tax rate with a median of 3.5%.

So you’re paying 3.5% in city income taxes, an additional 5% at the state level (for now), 10% in sales taxes, tons more in property taxes, not to mention plastic bag, water bottle, and utility bill taxes. And, of course, parking and red-light camera tickets.

And what services do we receive in return? TIF funds? Horribly underfunded pensions? Potholes every three blocks?

And I’m someone who supports a progressive state income tax, mind you.

The only way a Chicago income tax would be politically palatable is if it came in exchange for a whole lot lower taxes elsewhere–probably a swap for lower property and city sales taxes.

Comment by TKMH Wednesday, Apr 4, 18 @ 1:00 pm
Rich- I think what Stand tall is saying is that by keeping taxes low- politicians were able to hide their benefit decisions from taxpayers who were not aware what the underfunding would one day cost present taxpayers. It is nothing short of fraud on the citizens who are now having to confront the past mismanagement. If you want to single out one person for this if would be Madigan as he has been in leadership for nearly 40 years

Comment by Sue Wednesday, Apr 4, 18 @ 1:03 pm
==If you want to single out one person for this if would be Madigan as he has been in leadership for nearly 40 years==

Why not two? Edgar.

Comment by TKMH Wednesday, Apr 4, 18 @ 1:05 pm
Actually, if there was just one person to blame, I would name Dan Walker since he was the first to short the pension funds under the 1970 Constitution and that led to the IFT decision “allowing” underfunding.

Comment by RNUG Wednesday, Apr 4, 18 @ 1:12 pm
Doesn’t help to look backward for blame. Just happy to hear it’s in it’s rightful place instead of on the workers who did their job every day. Probably most were unaware of the politics involved in what would impact their retirement. Not everyone is or wants to be political. Most were too entrenched in their work and struggling with their bills and families like everyone else is.

What no one wants to confront is how to move forward. It’s not pleasant but each day the debt grows. Time is not our friend. A plan is needed yesterday.

Comment by Anonymous Wednesday, Apr 4, 18 @ 1:23 pm
RZnUG- TRS has been underfunded from year 1. Edgar at least did the Ramp. Thompson in terms of recent responsible people implemented the COLA. Madigan has been doing the budget for the longest and it’s never been balanced

Comment by Sue Wednesday, Apr 4, 18 @ 1:26 pm
==nothing short of fraud on the citizens==

And those in the pension system.

==Madigan has been doing the budget for the longest and it’s never been balanced==

Jumped on the blame Madigan ship didn’t we. Yes, he shares the blame. But he isn’t solely to blame. I’m not sure you’re aware of how our government works but the Speaker of the House doesn’t enact budgets all on his own.

Comment by Demoralized Wednesday, Apr 4, 18 @ 1:30 pm
==One and only successful attempt to negotiate==

Nobody can negotiate away pensions. It’s an individual right.

Comment by Demoralized Wednesday, Apr 4, 18 @ 1:31 pm
Demoralized- so if unions can’t bind their members thru negotiations why should employers even talk to them

Comment by Sue Wednesday, Apr 4, 18 @ 1:38 pm
We’re talking about pensions here and nothing else. The Constitution makes those an individual right. Wages and work rules aren’t an individual right guaranteed in the Constitution.

Comment by Demoralized Wednesday, Apr 4, 18 @ 1:41 pm
“Doesn’t help to look backward for blame. Just happy to hear it’s in it’s rightful place instead of on the workers who did their job every day. Probably most were unaware of the politics involved in what would impact their retirement. Not everyone is or wants to be political. Most were too entrenched in their work and struggling with their bills and families like everyone else is.”

This is very true. Despite being labeled as “greedy” union members who collect “fat-cat” pensions, a lot of these people are just trying to scrape up enough money to pay bills and give their children a better life than they had. It doesn’t help when we have politicians on the right saying these things, or even our local (D) politicians whispering in the ear of their favorite controlled reporters about “kids getting the shaft” while they waste public money on vanity projects before taking care of our obligations.

Comment by Anon35 Wednesday, Apr 4, 18 @ 1:48 pm
Thank you “Pot calling the kettle.” People, underfunding the public pension plans meant, essentially, we got $1 in services for $0.75 cents. The Tribune never complained. Now they are unhappy that catching up means paying $1.25. It’s called the RULE OF LAW, read the Supreme Court decision and explain how RNUG is wrong about what it means, if you don’t get this!

Comment by Anonymous Wednesday, Apr 4, 18 @ 2:20 pm
==Rich- I think what Stand tall is saying is that by keeping taxes low- politicians were able to hide their benefit decisions from taxpayers who were not aware what the underfunding would one day cost present taxpayers. It is nothing short of fraud on the citizens who are now having to confront the past mismanagement. If you want to single out one person for this if would be Madigan as he has been in leadership for nearly 40 years==

More likely it’s that past taxpayers didn’t care about present taxpayers, because they didn’t think it would be the same taxpayers. The ‘ as long as it’s not me’ mentality. Ignorance is not a justifiable defense. The money was spent and it’s now due. Maybe we should let bank robbers families keep the money because they were ignorant of what their family member did?
I don’t blame Madigan. He’s not on my ballot now and wasn’t then. We elect people to represent us and we allowed them to sreal Peter’s money on order to pay Paul. Therefore it’s the taxpayers who owe the money. We need to start paying attention to what our state budget is just like we pay attention to our household one.

Comment by Thoughts Matter Wednesday, Apr 4, 18 @ 2:37 pm
Yea but not to worry- just look at the lead article in the April 2 Crains Chicago- we are the only major metro area losing people and we have the worst market in terms of housing values. Great environment to raise taxes so we can pay for underfunded pensions

Comment by Sue Wednesday, Apr 4, 18 @ 2:37 pm
==losing people and worst market….==

That’s where the governor comes in. A pro-Illinois governor would work to make ILlinois an attractive place for business, not trash talk it. All I can hear is Illinois is Broken! Who’d be dying to move to a state where the governor talks about how terrible it is?

Comment by Anonymous Wednesday, Apr 4, 18 @ 5:36 pm
The Illinois Constitution is a complete abomination against fairness. I demand my 401k returns be guaranteed by public workers.

Comment by Anonymous Wednesday, Apr 4, 18 @ 10:19 pm
===The Illinois Constitution is a complete abomination against fairness. I demand my 401k returns be guaranteed by public workers.===

Fill out an application.

Work for the state of Illinois. No one is stopping you.

Also, pick a name.

Comment by Oswego Willy Wednesday, Apr 4, 18 @ 10:25 pm
OW, his name is Ron. He’s the “abomination” peddler. And the number one whiner on this topic.

Comment by Demoralized Thursday, Apr 5, 18 @ 8:27 am
- Demoralized -

You are likely right.

Usually - Ron - enjoys owning his/her ridiculousness.

Comment by Oswego Willy Thursday, Apr 5, 18 @ 8:29 am
Thanks for pointing this out Rich -We all need to move beyond historical fault laying, and get to ” what do we do now?”
1. Current employees and retired get the pension we promised them. This cant be overcome, legally and politically. Underfunding is a combination of benefits, plan design and funding. Illinois missed on all 3 components, compounded by time. The solution will require changes to all the variables, and will take decades to solve.
2. Anybody hired after today must be in a highly modified ( less generous) plan, that has permanent state funding. Scare mongering retirees they will get their pension stripped doesn’t help. They got a great deal. We gave it to them.

Talking about extinguishing the current plan OVER TIME is the only solution. The current unfunded problem goes away when the last pensioner quits collecting ( in 30-50 years……)
- “Cut the fat benefits” doesn’t solve the problem and empowers political opposition.
- Current pension plan defenders should be more careful about the “just raise taxes, not our problem” posture. The 12MM other people in Illinois will eventually resent it.

Comment by Lets B Adults Thursday, Apr 5, 18 @ 9:52 am