Lame duck Chicago Mayor Richard Daley has urged the Illinois General Assembly to amend a bill that aims to solve the Chicago's pension crisis. The bill currently places a large burden on citizens. The bill would give the city 30 years to get to a 90 percent funding ratio, and cost Chicago citizens $550 million in a property tax increase in 2015.

Daley wants Governor Quinn to fix the bill before signing it into law. "This is the highest real estate tax increase in the history of Chicago and that's only for fire and police. If you put the other unions in there, it's about $1.2 billion in one year. ... This will really hit the people."

Daley prefers a less steep, and less complete, solution: 50 years to get the police and fire pension funds to a point where they have assets to cover 80 percent of their outstanding liabilities.

The most controversial step Daley supports is a mandatory increase in employee contributions. Chicago Police officers now contribute nine percent of their paychecks to pensions. Under Daley's solutions, police officers would pay 12 percent, with the increase being phased in over a three-year period beginning in 2015. Firefighters who now pay 9.125 percent would end up contributing 12.125 percent.

Fraternal Order of Police President Mark Donahue argued that any increase in employee contributions must be negotiated with the union during contract negotiations. But those are at least a year away. He also stated that if the city wants an increase, it needs to be met with increased benefits. Which would, of course, eliminate the benefits of having an increase in the first place. Tom Ryan, president of the Chicago Firefighters Union Local 2, has a more positive take, saying he expected the city to seek employee contributions increases. "We have to find solutions together to make sure promises made to our members are kept," he said, awaiting details before saying whether or not Local 2 would oppose the bill.

The fact that pension solutions are leading to conflict is a good sign that Chicago is getting serious about addressing the issue. But will the bickering stop for long enough for solutions to be put into place? And will taxpayers and pensioners alike be ready for the inevitable sacrifices to come?

Filed Under : Pensions

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