Bill to shore up Chicago municipal workers’ pensions passes House

The Illinois House on Thursday once again passed a bill designed to shore up the pension funds for Chicago laborers and other city workers — a measure with identical language to a bill Gov. Bruce Rauner vetoed in March.

The House approved the measure 63-45.

The Senate bill — which was part of the “grand bargain” package and passed the Senate in January — would put more money into retirement systems covering some 88,000 city workers, excluding police officers and firefighters, who are covered by separate pension funds. The Illinois House passed an identical bill in December and it was unanimously approved by the Senate in January. Rauner vetoed it, saying it will “create another pension-funding cliff that the city does not have the ability to pay.”

The latest bill had no support from House Republicans. House Republican Leader Jim Durkin, R-Western Springs, said he wouldn’t support the measure without statewide pension reform.

“House Republicans are sensitive to the fiscal issues confronting Chicago and its pension system. However, we are confronted with the same problems with our 5 state pension systems which for all practical purposes are in worse shape,” Durkin said in a statement. “Unless paired with statewide pension reform, SB 14 today is a non-starter. The deadline to pass the Chicago Pension Bill should be extended so as to include with negotiations on broader pension reform.”

The governor, too, has said he needs wider reaching government pension reform in order to support the measure. He’s also questioned the use of revenue in the bill, which 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.

The new bill now goes to Rauner’s desk. If he vetoes it, 71 votes will be required to override his veto — which is not possible without Republican support.

On the House floor, Rep. Peter Breen, R-Lombard, said the bill would order “a tax increase on the people of the city of Chicago.”

The bill’s House sponsor, Rep. Barbara Flynn Curie, D-Chicago, said the measure would help “the city solve its own problem” and that it would make the funds whole: “We will not be looking at bankruptcy within the next 10 years.”

Rep. Christian Mitchell, D-Chicago, said the measure had bipartisan support last year, and blamed Rauner for the lack of Republican support.

“The only reason why anyone would be voting against this bill is the governor is throwing a temper tantrum as per usual about his useless Turnaround Agenda and wants to leverage the city of Chicago, the taxpayers of the city of Chicago in order to gain political advantage,” Mitchell said.

Under the 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 for the five-year ramp to actuarially required funding.

The 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.

The workers’ 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.

The legislation also would require newly elected Chicago aldermen and citywide elected officials to serve longer to achieve the maximum 80 percent city pension.

Contributing: Fran Spielman