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* Background is here and here if you need it. Greg Hinz…
In a joint appearance [with Gov. Pritzker and Mayor Lightfoot] at an event celebrating the state’s new capital program, Lightfoot didn’t directly confirm—but didn’t deny—that she’s pitching the idea of the state assuming responsibility for the city’s pension funds, including taking on their $28 billion in liabilities.
Gov. Pritzker turned a big thumbs down to that idea…
“The state is just above junk (bond) status,” he noted. Adding the city’s pension debts on top of that “would drive us to that point. So, we’re not going to do that. But there are other options.”
* More…
[Lightfoot] did mention a tax on legal, accounting and other professional services. But the levy, which would require state approval, would not apply to haircuts and other day-to-day things that would make it “regressive,” she said.
Lightfoot did declare that solving the city’s seemingly unending pension woes is a top priority, one she’s willing to risk her re-election on.
“The reason we haven’t solved the pension problem is (lack of) political will, pure and simple,” she said. “We have to get this problem solved. . . .If we don’t have some structural relief, we’re going to continue to have this (fiscal) problem time after time.”
So, the mayor is willing to “risk her re-election” by having the state assume her city’s $28 billion in pension debt? How remarkably brave she is.
Pritzker has not looked too favorably on service taxes in the past. And approving yet another round of taxes next year - which is in an election year - seems a bit of a stretch, particularly if those taxes are for a Chicago pension bailout. But, hey, maybe she can finally sit down with the legislative leaders and lay out her ideas. And if they could limit a new service tax to Chicago, she might possibly have a shot, but that may still be a reach.
By the way, this is just the sort of post that wouldn’t be complete without some cutting remarks from Wordslinger. Y’all have some slack to pick up here.
…Adding… Fran Spielman…
At first, Lightfoot said “a number of different options” were being considered, that she had “no definitive plan” for pension relief, and would make no specific “revenue ask” of the governor until she cuts more costs.
But asked about Pritzker’s apparent decision to slam the door on the idea of a state takeover of the city’s $28 billion pension liability, Lightfoot acknowledged a service tax was probably her next best hope.
“That is an option that we are looking at. And when we have a package of options finalized, we’ll present them to the governor and the senior leadership in the General Assembly,” the mayor said.
“Let me be clear: We’re not looking at a general expansion of the service tax,” Lightfoot said. “We’re not looking at expanding the service tax on mom and pop companies.”
posted by Rich Miller
Monday, Jul 1, 19 @ 3:35 pm
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Under what conditions could Il Democrats consider reforming the cost side of the pension equasion?
It’s seems to be a very generous system for a state and municipality that is past broke.
Comment by Phil Monday, Jul 1, 19 @ 3:41 pm
Less than two months on the job and Lightfoot is already planning her exit strategy.
Comment by Bourbon Street Monday, Jul 1, 19 @ 3:42 pm
If the state is going to take on Chicago’s liabilities, what Chicago assets are coming with it?
And if the state is going to bailout Chicago’s pensions, I have a feeling there will be a long line of municipal bailout seekers right behind Mayor Lightfoot.
Comment by Michelle Flaherty Monday, Jul 1, 19 @ 3:44 pm
== the mayor is willing to “risk her re-election” ==
Didn’t realize she had inherited Richard Daley’s mantel …
Comment by RNUG Monday, Jul 1, 19 @ 3:44 pm
Blago was ahead of his time with the GRT. And the mainstream media and this blog joined the Madigan bandwagon to defeat it. They roared at the 106-0 defeat of the GRT but today praise JB for raising taxes and call Lori “remarkable brave”. The structural deficit existed in 2007 and remains till this day, only worse.
Comment by Hippopotamus Monday, Jul 1, 19 @ 3:45 pm
===what Chicago assets are coming with it?===
Red light cams? lol
Comment by Rich Miller Monday, Jul 1, 19 @ 3:45 pm
will then also get a seat at the table in any City collective bargaining sessions; be careful what you wish for…
Comment by State Monitor Monday, Jul 1, 19 @ 3:51 pm
Tax any transactions tied to Rahm’s adventures in investment banking.
Comment by City Zen Monday, Jul 1, 19 @ 3:51 pm
Risk her re-election?
She’s been in office 46 minutes. Ugh.
It’s as though Lightfoot has this idea that her wants are going to supersede what the governor sees as the path moving forward.
Governors can’t be leveraged by mayors. They can be influenced but not leveraged.
Go see the four tops, Mayor Lightfoot. Get back to us.
Comment by Oswego Willy Monday, Jul 1, 19 @ 3:54 pm
Governor Rauner spent his entire 4 year term unsuccessfully trying to pass bipartisan pension reform while being ignored by Mayor Emmanuel and Speaker Madigan.
Why they didn’t find some common ground on incremental progress like the extremely weak Cullerton bill that passed the Senate is a total mystery.
Ignoring the problem did not make it go away and now it is up to Democrats to fix this on their own. I don’t think the Pritzker plan of paying 10% of a huge tax hike toward the pensions is going anywhere.
Rahm was very courageous calling for pension reform as a lame duck with weeks left in office.
Comment by Lucky Pierre Monday, Jul 1, 19 @ 3:55 pm
JB would risk his re-election by bailing out the city.
I am still waiting for a sign that Lori can manage the city. So far she seems more show horse than work horse.
Understanding the city departments is a full time job. Not sure she is doing that.
Comment by Last Bull Moose Monday, Jul 1, 19 @ 3:56 pm
It is hard to top Rich’s own cutting remarks: “So, the mayor is willing to “risk her re-election” by having the state assume her city’s $28 billion in pension debt? How remarkably brave she is.”
I’m starting to get that Rahm feeling from this Mayor. I loved the way she spoke in the general election but now I’m losing faith.
Comment by Law Man Monday, Jul 1, 19 @ 3:59 pm
Ah yes, the good ole “structural relief” euphemism usually reserved for those seeking to cut benefits.
Could we sell the Thompson Center more than once?
Comment by The Doc Monday, Jul 1, 19 @ 3:59 pm
Brave Sir Robin
https://www.youtube.com/watch?v=BZwuTo7zKM8
Comment by DuPage Bard Monday, Jul 1, 19 @ 3:59 pm
Chicago has been increasing their property taxes, but the overall rate in Chicago of 7.56% is still below the average state rate of 8.76%. If the rate in the City was increased to match the State average, it would generate an additional $1.038 billion. So there seems to be room.
However, I would agree that property taxes in Illinois are too high. And there is that task force that will look at what can be done. If they actually make a recommendation, it will cost money. Apply the changes statewide except to Chicago. But then give Chicago the money it would have received for property tax relief and use it for pensions.
Comment by My button is broke... Monday, Jul 1, 19 @ 4:00 pm
== that she’s pitching the idea of the state assuming responsibility for the city’s pension funds, including taking on their $28 billion in liabilities. ==
Well, Hell did freeze over and the Cubs did win the World Series, so I guess anything is possible …
Guess after the fact she is trying to touch the bases she should have ran before any public statement.
Comment by RNUG Monday, Jul 1, 19 @ 4:00 pm
It sounds like Lori is ready to open the first (of three) envelopes left by Rahm.
Comment by Jocko Monday, Jul 1, 19 @ 4:06 pm
Want to solve your budget problems, Mayor? Increase your property tax rate to that used by many Illinois towns and improve assessments so they reflect market values rather than tax lawyers’ fantasies. Until then, hands off state funds.
Oh, and work toward Medicare for all. That alone might save your bacon, along with many Illinois municipalities.
Comment by JIbba Monday, Jul 1, 19 @ 4:07 pm
A professional services tax applicable solely to Cook County?
Comment by Hamlet's Ghost Monday, Jul 1, 19 @ 4:07 pm
It takes 30 and 60 to tango and you need them to be willing to risk their re-election. Not sure how you get from A to B on that one.
Comment by The Captain Monday, Jul 1, 19 @ 4:20 pm
It never hurts to ask. The worst he is going to say is no and she can say ‘I tried’.
I would suggest that Chicago try getting to Aurora’s municipal tax rate, that would bring in some extra money.
Comment by OneMan Monday, Jul 1, 19 @ 4:28 pm
It would be nice if, someday, politicians use sound tax policy as a guiding notion, rather than sound bites. Taxing consumer services is exactly what we should be doing, precisely because it makes the sales tax less regressive, not more. Ugh.
Comment by Notsosure Monday, Jul 1, 19 @ 4:35 pm
Well how did Chicago get in this mess? There’s no Republican governor to blame. The Democrats controlled all the levers of government and created this debacle. Surely the Republicans must be to blame for this. /s/
Comment by Downstate Monday, Jul 1, 19 @ 4:39 pm
How about a 1/4% city earnings tax?
Comment by Blue Dog Dem Monday, Jul 1, 19 @ 4:40 pm
Pass a City of Chicago income tax. You guys made your own beds.
Comment by Token Conservative Monday, Jul 1, 19 @ 4:47 pm
The retail sales tax should be re worked. Should hit service industries and i mean all service industries. Why no tax on dry cleaning, hair cuts, is that more repressive than a tax on an ice cream cone? Sure hit the attorneys, and accountants if you can. And yes real estate taxes should go to collar county rates. Re do the whole property and retail sales tax system. Then Pritzger can go to DC and fix that mess.
Comment by DuPage Saint Monday, Jul 1, 19 @ 4:48 pm
“The reason we haven’t solved the pension problem is (lack of) political will, pure and simple,” she said. “We have to get this problem solved. . . .If we don’t have some structural relief, we’re going to continue to have this (fiscal) problem time after time.”
Ya’ know, that structural relief you’re talking about doesn’t necessarily have to come in the shape of more taxes. You could tackle the benefit side. Do you have the political will for that? Or just for tax increases?
Comment by Just Me Monday, Jul 1, 19 @ 5:00 pm
== You could tackle the benefit side. ==
Given the various IL Supreme Court decisions on cutting existing government pension benefits, what do you propose that will pass constitutional muster?
Comment by RNUG Monday, Jul 1, 19 @ 5:08 pm
How long before Herzzonor and JB rollout Tier 3?
Anything that smells like a Chicago pension bailout is DOA for voters of both parties in rural Illinois.
Comment by Rte 40 Monday, Jul 1, 19 @ 5:26 pm
==Pass a City of Chicago income tax.==
They need the General Assembly to amend state law, which prohibits local income taxes.
Comment by Whatever Monday, Jul 1, 19 @ 5:35 pm
There will be no Tier 3 as Tier 2 is at risk for not meeting minimum requirements.
Comment by Last Bull Moose Monday, Jul 1, 19 @ 5:39 pm
Where is Rauner’s scorched-earth pragmatism?
Bond agencies? Please.
Chicago? Come on.
/s
Comment by Mr. K. Monday, Jul 1, 19 @ 5:56 pm
I really didn’t think she would be the type to just say “if someone else [State] takes responsibility, our [City] problem is solved.” She may be new to politics, but she isn’t new to negotiating for goodness sake. And if her “proposal” was just intended to provide cover for having to go to new taxes (”gosh, the state wouldn’t assume our liabilities, so…”), it was amateurish at best. Do better please.
Comment by Leslie K Monday, Jul 1, 19 @ 5:57 pm
== They need the General Assembly to amend state law, which prohibits local income taxes. ==
Probably easier to get a city income tax than permission for the city to file bankruptcy.
Comment by RNUG Monday, Jul 1, 19 @ 6:06 pm
Each of the pension funds are units of state government. The whole thing is going to wind up at the state anyway when they start becoming insolvent one by one. She isn’t wrong.
Comment by Truth Monday, Jul 1, 19 @ 6:17 pm
A local income tax is probably the most progressive long term revenue fix. Can’t be done by home rule; it would require state enabling legislation allowing municipalities (or counties) to opt in, the Governor’s signature and City Council approval. It could be collected and distributed by the State, just like the sales tax.
Ideally it would have a rate set by City Council and could move to graduated tax rates if and when that is approved for the State by referendum. Ideally the local income tax would not apply at all below a certain income to be determined.
Comment by James Monday, Jul 1, 19 @ 6:23 pm
So…her solution ultimately is tax retirement and services throughout the state to pay for Chicago pensions. I don’t think it will play in Peoria.
Comment by oh? Monday, Jul 1, 19 @ 6:41 pm
== Each of the pension funds are units of state government. ==
Um … Nope. Those are city pension funds Lightfoot wants bailed out, including the Chicago Public Schools pension fund. They are not part of the 5 State pension funds.
The State is only responsible for TRS, SURS, SERS, JRS & GARS.
Comment by RNUG Monday, Jul 1, 19 @ 7:00 pm
Violence? use other people’s money to “invest” in violent areas. Pensions? Use other people’s money to pay them. Problems? look outside of Chicago for solutions Kind of a redundant theme for Lightfoot. “Our problems and what are you going to do about them.” In her heart, aggrieved.
Comment by oh? Monday, Jul 1, 19 @ 7:03 pm
Property taxes are sky high in Chicago. Look at the actual taxes paid by average middle class citizens. People who are in their late eighties and early ninties struggle with their only asset being their home. It is too much
Comment by Evanston Monday, Jul 1, 19 @ 7:11 pm
RNUG - I’ll give you a suggestion. City of Chicago employees have a Cadillac medical insurance plan, with a deductible of a mere $300. The union argues that this overly generous plan is due to the large insurance pool. I say the savings of that large insurance pool should go to the taxpayers, not the tax eaters, and they should switch to an HMO with a deductible of $1,200.
I don’t know what the savings are to this, but I imagine it would be millions of dollars, all money that can go to the pension fund.
Does the Mayor have the political will to stand up to AFSCME?
Comment by Just Me Monday, Jul 1, 19 @ 7:14 pm
In light of the give and take between RNUG and Just Me, why should the State be involved at all regarding the Chicago’s pension issues. Think JB should be Ponsious Pilate on this one.
Comment by Bogey Golfer Monday, Jul 1, 19 @ 7:29 pm
== City of Chicago employees have a Cadillac medical insurance plan ==
Assuming you could get the union to agree in contract talks, that could work since it is cutting current employees’ current benefits. It could free up some cash to be paid into the pension funds. But it doesn’t do much to reduce the existing city pension debt, which is the real problem.
Comment by RNUG Monday, Jul 1, 19 @ 7:30 pm
Evanston…taxes are not sky high in Chicago in contrast to others in the state. We have late 80 and 90 all over Illinois. Taxing their retirement to supplement Chicago retirees? No, think not. The state dynamo idea is bunk. It is the collar counties that are. Chicago has been a fool’s paradise…time to pay up.
Comment by oh? Monday, Jul 1, 19 @ 7:34 pm
== Property taxes are sky high in Chicago. ==
Compared to?
I look at the valuation of Chicago homes and my homes, and the percentage of actual value (not assessed) paid … and my reaction is people in Chicago are getting a break.
Comment by RNUG Monday, Jul 1, 19 @ 7:35 pm
Chicago is shrinking. Council mandates like a higher minimum wage and union backed forced organizing ordinances will only expedite the exodus and accelerate the loss of low wage jobs . Tighten the belt, take on the public employee unions and leave private business alone. Earth to Mayor Lightfoot–the public employee candidate got shredded, get a budget chief with some experience because Chicagoans are tired of paying for public pensions.
Comment by See the Light Monday, Jul 1, 19 @ 7:51 pm
Perhaps the problem with Chicago is their assessment system and their low tax rate. It’s time Chicago and Cook County got to the same format the rest of the State is on taxes.
Comment by fruatrated GOP Monday, Jul 1, 19 @ 8:35 pm
Mayor Lightfoot truly does not have both her Orr’s in the water. I think she is nine cents short of a dime. No way the state is going to take on the Chicago Albatros of debt
Comment by Sailor Monday, Jul 1, 19 @ 9:18 pm
I wonder if she’s doing this to try and negotiate down to something else?
Comment by Nick Monday, Jul 1, 19 @ 9:27 pm
Very hard now to justify working in a day program with 10-16 disabled individuals for a min wage. Not only is this difficult work one bad mistake can put you in jail. It’s not an easy peezy job
Comment by Tee Monday, Jul 1, 19 @ 9:30 pm
But asking, what about that CBOT transaction tax?
Comment by Already know the answer Monday, Jul 1, 19 @ 9:53 pm
Well, Chicago could always sell the Picasso.
Comment by A Jack Tuesday, Jul 2, 19 @ 7:57 am
@RNUG
==Um … Nope. Those are city pension funds Lightfoot wants bailed out==
Why don’t you read the Illinois Compiled Statutes and get back to me (particularly the pension code). Each of the pension systems are political subdivisions and creatures of state law. They will be the state’s problem at some point.
Comment by Truth Tuesday, Jul 2, 19 @ 9:34 am