After 10 months of playing cat-and-mouse, Mayor Rahm Emanuel’s closest ally in Springfield has sent to Gov. Bruce Rauner legislation giving Chicago 15 more years to ramp up to a 90 percent funding level for police and fire pensions.
Illinois Senate President John Cullerton (D-Chicago) has been holding the bill — approved by the Illinois House and Senate last spring — amid concern that Rauner would veto the legislation to squeeze cash-strapped Chicago and strengthen his own hand in the budget stalemate over the governor’s demand for pro-business, anti-union reforms.
The delay has already been costly to Chicago taxpayers.
Two weeks ago, Emanuel used $220 million in “short-term bridge” financing to make a state-mandated payment to police and fire pension funds that’s higher than his tax-laden 2016 budget anticipated because the police and fire pension reform bill has not been signed into law.
On March 31, Cullerton quietly sent the legislation to the governor’s desk, a move his spokesman described as “procedural housekeeping.” The governor has 60 days to act on the bill.
If Rauner vetoes the bill, there would still be time to attempt an override before the spring session ends.
In a statement, the governor’s office said: “The governor has been clear he will consider this legislation as part of a broader package of structural reforms that help taxpayers across the state. He welcomes dialogue and negotiation with all stakeholders as the process moves forward.”
A mayoral confidante, who asked to remain anonymous, said: “It’s important for the city. It needs to get done. If he signs it, great. If he does nothing, that’s good for us as well. If he vetoes it, it would go back to the Senate. It passed the first time with 38 votes. We need 36” votes to override.
“All we’re asking for is the same funding arc that Downstate police and fire already have. There’s no reason for [Rauner] not to sign it,” the confidante said.
In a statement issued Tuesday, Emanuel reiterated his commitment to making certain taxpayers do not “bear the burden alone” for securing city employee pensions.
“Current state law requires that Chicago taxpayers close a $550 million gap in one year, even though it was created by decades of underfunding,” the mayor said.
“That’s why I worked with members of the General Assembly to pass . . . a reasonable and responsible funding plan that has the support of police and fire union leaders, passed both the House and Senate, and was included in Gov. Rauner’s own pension reform plan. If this bill becomes law, we will ensure that our first responder pensions are secured and fully-funded, while reducing the impact on Chicago’s taxpayers.”
After authorizing the $220 million short-term borrowing, Emanuel emphatically rejected the suggestion that he “made a mistake” by trusting his old friend Rauner to sign the police and fire pension reforms.
“I am not going to go to the property taxpayers of Chicago, who just stepped up in a big way, and say, ‘You should pay $250 million more because Springfield’s politics are dysfunctional. Get yourself another mayor. It was hard getting what I did passed. I’m not going to ask taxpayers to pay more to make up for Springfield’s failures. Not a chance,” the mayor said during a taping of the WLS-AM (890) Radio program, “Connected to Chicago.”
Emanuel acknowledged that borrowing more money is “not my favorite option.” But it’s a “better option” than asking property owners to pay more at a time when Rauner’s pro-business, anti-union agenda has the state “spinning around and not doing anything,” the mayor said.
The city pays 2.5 percent to establish the short-term line of credit and 3 percent on the amount it draws.
The $220 million was deposited with City Treasurer Kurt Summers with instructions to make “short-term and mid-term investments” only.
“We’ve worked with the treasurer to earn interest but not tie up the money long-term. Should the governor sign the legislation, as we expect him to do, we’ll be able to withdraw the deposit and repay the line of credit,” Budget Director Alex Holt said.
On March 16, trustees of the firefighters pension fund demanded that the city release $47.1 million on deposit with the treasurer within 31 days, so that it can be invested by the pension fund.
But sources said Tuesday that demand has since “cooled off.”
Tom Ryan, president of the Chicago Firefighters Union Local 2, told the Chicago Sun-Times earlier this month that the union has a “vested interest in how this plays out,” but the pension board “holds, distributes and invests” the money.
“This is a bill that’s due. Like any bill, it has to be paid. That is for them to figure out [how]. The law’s been in place for a number of years now. This isn’t a surprise,” Ryan said.
“As long as the pension fund gets the money they are owed by law, the city has fulfilled their end of the bargain . . . The way the law reads, they have to account for the money. The money has been set aside. Their hope is there’s some movement with legislation down in Springfield. If that does not happen, that money set aside will be given, I guess, at the end of the year. As of right now, they haven’t done anything wrong.”