Rahm removes property-tax requirement in city pension bill

Written By Dave McKinney Posted: 04/07/2014, 08:34pm

Mayor Rahm Emanuel and House Speaker Michael Madigan Monday stripped out controversial language from city pension legislation that had authorized the City Council to impose a property-tax hike, putting the stalled measure back on the fast-track at the state Capitol. 

The move came just hours after Gov. Pat Quinn made clear he was not on board with Emanuel’s earlier proposal to hike property taxes as a way to solve a looming pension crisis in Chicago and after a Wall Street bond-rating agency warned that even with the property-tax language, the legislation was not a “panacea” to solve all of the city’s pension woes.

Madigan, D-Chicago, filed an amendment to Senate Bill 1922 after the House adjourned Monday without taking any action on the stalled legislation. Sources now expect the legislation to be voted upon as early as Tuesday.

“Working with legislative leaders, bill sponsors, the governor, and our partners in labor, we have addressed their concerns and can now move forward to save the retirements of nearly 60,000 city workers and retirees in Chicago,” Emanuel said in a prepared statement after the bill was changed.

“I reject the false choice between allowing the pension funds to go belly up, delivering thousands of pink slips to city workers, or enacting a massive property tax increase. This plan will secure these pension funds while ensuring the taxpayers don’t have to shoulder the burden alone,” the mayor said.

In a news conference earlier in the day on the Near West Side, Quinn repeatedly referred to Emanuel’s plan as only a “sketch” but said he would not back a plan that relied heavily on property tax hikes.

“What I saw last week wasn’t a plan, it was a sketch,” Quinn said. “It was a sketch that would relegate property owners in Chicago, families and businesses to a future of higher and higher property taxes. I don’t think that’s a good way to go.”

“They’ve got to come up with a much better, comprehensive approach to deal with this issue,” Quinn continued. “But if they think they’re just going to gouge property tax payers, no can do. We’re not gonna go that way.”



Chicago’s pension fund scorecard
How Chicago’s property tax rate compares

Last week, Madigan’s legislation containing the property-tax provision narrowly advanced out of a House committee and onto the floor of the legislative chamber, with the speaker predicting a vote on the issue Thursday.

But that never happened as rank-and-file Democrats were spooked by having to wear the collar for a property-tax increase, and Republicans stayed off the legislation entirely for that reason, deriding the plan as a $750 million property-tax grab by the city.

On Friday, House Minority Leader Jim Durkin, R-Western Springs, was the first legislative leader to publicly call for Emanuel to drop the property-tax component, even though a top leader with SEIU Local 73 warned such a move could draw the opposition of organized labor that had negotiated the deal with the mayor.

But the deal appears to have backing from much of the organized workforce at City Hall because of new language that gives the state the right to withhold state funding to Chicago during any year that city fails to make its required contribution to the Municipal Employees or Laborers pension funds.

“I would still favor that we continue to pursue other forms of revenue just to strengthen that funding position,” said Matt Brandon, secretary treasurer of SEIU Local 73, which helped negotiate the bill. “But for now, if we have to start from somewhere, we start from here.”

But AFSCME Council 31, one of three unions opposed to the legislation, said the mayor’s move does not alter the union’s view that the plan is unconstitutional.

“Our position and that of the We Are One Chicago coalition of unions is unchanged,” AFSCME spokesman Anders Lindall said. “The revenue in the original bill is needed, whether from the property tax or another  source, but the cuts to current and future retirees are far too drastic.”

With no mention in the legislation about property-tax increases, revenue decisions will be left up to the City Council and mayor, who has publicly called for a phased-in property-tax hike to help right the city’s underwater pension systems.

Additionally, the amendment aims to ease the financial hit of the pension package on low-income city retirees. Under the plan, any retiree receiving pension benefits of $22,000 or less would be guaranteed an increase of at least 1 percent of their original annuity annually.

With the changes, Madigan spokesman Steve Brown told Early & Often that the legislation now resembles earlier pension packages affecting the Chicago Park District and Water Reclamation District of Greater Chicago that passed the Legislature and were signed into law by Quinn.

Emanuel’s original proposal called for Chicago property owners taking on $250 million in property tax increases over five years while city employees made increased pension contributions that will cost them at least $300 more a year.

Hours before he revised his bill, Emanuel insisted he was not trying to force Springfield to wear political jacket for Chicago’s pension problems

In a separate news availability earlier on Monday, Emanuel was asked about Quinn’s lukewarm reception to the bill.

“When we’re done with the bill, I think he sees how important getting pension reform is to the 60,000 workers who require it because they work full-time to get it,” said the mayor, who has endorsed Quinn’s re-election over close friend Bruce Rauner.

“This would be the type of legislation that meets the goals of the city of Chicago to make sure we have resolved an issue that was hanging over the city, hanging over our retirees, hanging over our workers, hanging over our residents. I wanted to make sure we had a proper balance to achieve that.”

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