The governor says the bill will stabilize pension systems and protect retirement benefits for Illinois police officers and firefighters.
To pay for it, municipalities including Chicago will have to raise contributions to their under-funded pension systems.
Mayor Richard Daley says that will lead to huge property tax hikes. But Friday the governor denied that.
"I don't think that's true at all. The city of Chicago like all cities has a duty. This year we lost three firefighters in the line of duty and six police officers. The least we can do is have a decent retirement for all of those who serve," said Daley.
The governor says Chicago and other cities have five years to figure out other ways to fund their pension systems besides raising property taxes.
