Rahm Emanuel Challenges Garcia to Offer Solutions for Chicago Fiscal Crisis

Chicago Mayor Rahm Emanuel talks with residents at a senior living center during a campaign stop on February 23, 2015 in Chicago, Illinois.

Photographer: Scott Olson/Getty Images

Chicago Mayor Rahm Emanuel said his opponent in an April 7 runoff isn’t leveling with voters about pension liabilities that threaten to drag the nation’s third-most-populous city into financial ruin.

Emanuel told Jesus “Chuy” Garcia that he needs to be “forthright” about the crisis, rather than waiting until after election day to appoint a committee to devise solutions.

“There’s a real difference,” Emanuel said while sitting next to Garcia during a televised debate Monday night. “Chuy, you laid out a commission, not a plan.”

Chicago, facing $20 billion in unfunded pension liabilities and a $600 million payment due next year, is approaching a fiscal precipice. The race has become a referendum on Emanuel’s efforts to fix Chicago’s finances. The next mayor inherits a city that credit-rating companies have said is approaching insolvency if its pensions aren’t bolstered.

Garcia, a 58-year-old Cook County commissioner with strong support from teacher unions, said the mayor is beholden to the wealthy and has neglected the city’s impoverished neighborhoods.

“This mayor has provided corporate welfare to his cronies,” Garcia said. “We’ve seen broken promises and we’ve seen the wrong priorities.”

Emanuel, 55, referred to his opponent by his nickname throughout the debate, while Garcia called the mayor by his title.

Emanuel, who said his plan specifically avoids a property-tax increase, voiced support for a city-run casino whose profits would be dedicated to pensions, and pointed repeatedly to agreements he has brokered with two of four retirement funds. Garcia countered that Emanuel’s pension restructuring, which forces employees to pay more and get fewer benefits, is tied up in the state Supreme Court.

Government Transparency

Garcia, who criticized Emanuel’s administration for a lack of transparency, faulted the mayor for not following through on promises like hiring 1,000 new police officers to combat crime in Chicago, where shooting rose 12 percent last year, even as homicides dropped to the lowest level since the 1960s.

Garcia has proposed using some of an estimated $100 million set aside for police overtime to pay for the additional officers. Emanuel said that money can’t be entirely reallocated.

“When you’re mayor, you have to pay the bills,” Emanuel told Garcia about halfway through the 60-minute debate.

The failure to pay them is taking its toll. Moody’s Investors Service cut the city’s credit rating Feb. 27 to Baa2, two levels above junk. Chicago has the lowest score among the nation’s largest cities, excluding Detroit, which last year emerged from bankruptcy.

Emanuel was forced into runoff against his fellow Democrat after he failed to win a majority against four challengers in a Feb. 24 nonpartisan election. He won a 45.6 percent plurality while Garcia finished second with 33.5 percent.

The mayor held a 51 percent to 37 percent lead over Garcia in a poll published last week in the Chicago Tribune.

Before it's here, it's on the Bloomberg Terminal.