Illinois Senate files backup bill for city worker pensions

SHARE Illinois Senate files backup bill for city worker pensions

Gov. Bruce Rauner | Sun-Times file photo

SPRINGFIELD — The Illinois Senate has filed a backup plan for a bill to help save two city worker pension funds — just days after Gov. Bruce Rauner vowed not to sign a measure without a statewide pension reform fix.

A bill already passed the Illinois House and Senate during the 99th General Assembly, which ended Wednesday. But Rauner won’t support the bill without wider pension reform. And his administration questioned the bill’s use of revenue — which they contend would resort to the city using property tax money to fund pensions after it runs out of funds from a new tax on city water and sewer service.

City Hall on Thursday, however, said it wouldn’t have to resort to property taxes to put both funds on a path to solvency — based on pension reform and a funding solution that increases payments for the next six years.

“We have said all along that the increases will be manageable and we will look to cuts and reforms along with sustainable revenue growth to support those payments six years from now,” city financial spokeswoman Molly Poppe said.

The bill is expected to be sent to the governor soon.

If Rauner doesn’t veto or sign it, that bill will become law.

However, the Senate filed its own bill — with identical language to the original bill — on Wednesday after inauguration as a backup plan should the governor veto the previous measure.

Rauner’s lack of support for the bill sparked a war of words between his administration and that of Mayor Rahm Emanuel’s, who dubbed him “Governor Gridlock” on Monday. The governor’s office shot back at that assessment, blaming “the Chicago machine” for a pension disaster that punishes homeowners and called Emanuel “Madigan’s Mayor,” a reference to House Speaker Michael Madigan, D-Chicago, Rauner’s political nemesis.

Under the city worker pension plan, city taxpayers would contribute millions more a year to the municipal workers’ and laborers’ pension funds. To pay for the increased contributions, the City Council approved a new tax on city water and sewer service. Without acting, the Municipal Employees Pension Fund would be left with a gaping hole in 2023 — even after a utility tax is fully phased in — that would require tax increases to honor the city’s commitment to reach 90 percent funding over a 40-year period.

In mid-September, the City Council easily approved the mayor’s plan to slap a 29.5 percent tax on water and sewer bills to save the Municipal Employees pension fund.

But the Illinois General Assembly still needed to sign off on employee concessions tied to the deal as well as the funding schedule.

Same goes for the mayor’s plan to save the laborers pension fund, bankrolled by a previously approved, 56 percent tax on monthly telephone bills.

Those concessions call for employees hired after Jan. 1 to become eligible for retirement at age 65 in exchange for an 11.5 percent pension contribution. That’s 3 percentage points higher than employees pay now.

Veteran employees hired after Jan. 1, 2011, get to choose between contributing 11.5 percent for the right to retire at 65 or continuing to pay 8.5 percent and waiting until 67 to retire.

Contributing: Fran Spielman

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