Mayor proposes measures to reduce city's pension shortfall

May 8, 2012 3:18:50 PM PDT
Mayor Rahm Emanuel warned state lawmakers that disaster is looming over the city's $20 billion pension crisis.

The mayor said property taxes in Chicago could go up 150 percent, and class size could expand to 55 students in schools. He stressed lawmakers must pass pension reform.

Emanuel to Springfield Tuesday to personally lobby for reforms to ease the underfunding problems that plague the city's pension system.

"Meeting this challenge is a responsibility that comes with this office," he said.

After leaving a private meeting with House Speaker Michael Madigan, the mayor was given a celebrity's welcome in the committee hearing room. But Emanuel was all business, asking lawmakers for reforms that would reduce the combined $20 billion projected shortfall in Chicago's six worker retirement systems.

"Without fundamental reform to our pension systems to guarantee retirement security for our employees, Chicago's economy and the quality of life will falter," said Emanuel.

To reduce the city's pension shortfall, Emanuel wants a five percentage point increase phased in over the next five years in the amount city workers pay toward their retirements. He wants to raise the city's retirement age to 67 and to give new hires a choice between the fixed benefit plan or a 401K. And for the next 10 years he wants to eliminate automatic cost of living adjustments for current retirees.

"People are getting the fact that a 3 percent compounded COLA puts a huge, huge pressure on a pension system," said Rep. Tom Cross, (R) Minority Leader.

Fraternal Order of Police President Michael Shields said the mayor should have presented his plan to the unions before he revealed to state lawmakers and news media.

"I would expect that the mayor and his staff would have leaked this to his employees rather than leaking it to the media as he continuously does," said Shields.

Late last month, Gov. Pat Quinn proposed similar measures to fix the state's pension systems. Emanuel's recommendations for the city's plans would require in the long term, an even larger chunk of an individual worker's paycheck.

"As you know, the governor has one per cent each year for three years," said Emanuel. "I'm suggesting for the health of our individual systems, one per cent each year for five years."

The mayor said that when it comes to pension reform, no one size fits all. He wants a plan that is tailored to the needs of the city of Chicago.

Load Comments