Mayor Rahm Emanuel said Wednesday he “wasn’t bragging” as much as he was “acknowledging how we stabilized” skyrocketing health care costs in a 2015 email exchange that has infuriated retired city employees stripped of their 55 percent health care subsidy.
“You can call what I did heartless. We worked it through over a three-year period. We avoided raising taxes. And we avoided cutting basic neighborhood services. And we still met the objective of providing and giving people health care,” the mayor said.
“Over 30 or 40 years, we promised benefits that were never paid for. Not only has this [three-year phase-out of retiree health care] saved the city $100 million. It was gonna grow to $350 million with no revenue source. I wasn’t bragging so much as acknowledging how we actually have stabilized our health care costs for the first time in 30 years. Nobody in the private sector or public sector has done that.”
The exchange of emails with venture capitalist Henry Feinberg that infuriated city retirees was among 2,700 private emails released by City Hall last month as part of an agreement that ended a marathon legal battle with the Better Government Association.
The email chain started just days after Emanuel unveiled a 2016 budget that included a $588 million property tax increase for police and fire pensions and school construction.
Feinberg wrote, “Massive tax hikes w/o reform is the problem that got us here.” He enclosed an article under the headline, “The Shock and Awe Address Rahm Should Have Given.”
It proposed radical solutions under the threat of bankruptcy, including terminating contracts and collective bargaining agreements; “broad and deep” layoffs and pay cuts; “massive operational changes and a ban on future contributions to city employee pension funds, with a “new, affordable plan” to cover only new employees and “certain participants particularly hurt” by termination of old plans.
Emanuel took exception to the radical recipe, calling his budget endorsed by the Civic Federation a “major restructuring of our finances….You may want to look it up.”
Feinberg stood his ground, reminding Emanuel that, when the two men met for lunch at Coco Pazzo, “I shared with you my conviction that pensions were the 1,000-lb. gorilla in the room” and the “mission critical objective that could/would sink Chicago even if you made progress across many other fronts, which, to your credit, you have.”
“So, we may need to agree to disagree. Massive tax hikes without pension reform is fiscally insane. Bruce [Rauner] gets it and is sticking to his guns,” Feinberg wrote.
Emanuel countered, “You obviously have not read the Supreme Court decision on the State of Illinois Constitution. Their view is pretty clear. No reform allowed.”
That’s when Feinberg noted that Emanuel had never hesitated to “let a judicial ruling get in his way and not find a creative work-around solution” and the mayor made the remark that has become a rallying cry with city retirees.
“Never. Which is why I eliminated retiree health care. Only elected official to eliminate—not cut or reform—a benefit. Thank you very much. A $175 million saving!” Emanuel wrote.
Retirees have called the email “heartless.”
As of Jan. 1, roughly 10,000 city employees who started working for the city before April 1, 1986, and do not qualify for Medicare, are on their own to search for coverage that’s difficult or too expensive to find.
On Wednesday, Emanuel was still stating the facts without emotion, which is what angered retirees in the first place.
“I made a pledge in 2011 that we were gonna get health care costs under control and still deliver it. And we have,” the mayor said.
“From a wellness program to a change in making sure that people pay for retiree health care as we negotiated to also making sure we change the way we did our community [mental] health care, where we now have better service and saving $14 million a year. And we did not raise taxes or cut service to do it.”