- Chicago will have to pay almost $1 billion more to pensions
- Mayor Rahm Emanuel says veto forces ’unnecessary’ tax increase
Illinois Governor Bruce Rauner vetoed legislation on Friday that would have given Chicago a partial break on its pension payments to police and fire retirement funds, escalating costs for the junk-rated city.
The bill would have given Chicago 40 years instead of 25 to get its public-safety pensions to 90 percent funded. The Republican’s veto means the city must pay an additional $220 million to the retirement funds this year and almost $1 billion more over the next four years. The two pensions were only about a quarter funded as of December 2014. Chicago Mayor Rahm Emanuel, who had long insisted that Rauner sign the bill, decried the first-term governor’s move.
“With a stroke of his pen, Bruce Rauner just told every Chicago taxpayer to take a hike,” said Emanuel, a Democrat, in a statement. “All he’s doing is shaking down Chicago residents, forcing an unnecessary $300 million property-tax increase on them and using them as pawns in his failed political agenda.”
Chicago already adopted a record property-tax increase to shore up the police and fire pensions, but the city was counting on the legislation to stretch out the amortization of the debt. The nation’s third-largest city has shortchanged its pension funds over the last decade, leaving it with more than $20 billion of unfunded liabilities. Rauner had said he would consider signing the pension bill as long as it is part of a package of structural changes.
“Absent reforms, this will simply balloon liabilities and ultimately crush taxpayers,” Rauner said in a statement after his veto. “This is the same reckless policy that led the city of Chicago and the state of Illinois to financial crisis.”
Illinois is in its 11th month without a budget because of a standoff between the Democrat-led legislature and Rauner. He has said any compromise must include some of his agenda items such as changes to workers compensation costs, curbs to unions and property tax relief. There is little sign of progress with just four days left for the two sides to agree on a spending plan before the end of the regular legislative session on May 31.