Lightfoot vows to tackle pension crisis once and for all, even if means risking her political future

Mayor Lori Lightfoot said Friday she’s willing to tackle Chicago’s “mounting, looming, all-consuming” pension debt once and for all, even if it means risking her political future.

In a rousing speech at the Civic Federation’s annual civic awards luncheon, Lightfoot made it clear that Chicago needs help during the Illinois Legislature’s fall veto session to solve the problems that her predecessor left behind.

But the mayor didn’t say whether the help she was seeking would include merging city employee pension funds, a longer road to 90% funding or asking the General Assembly to empower the city to broaden its sales tax umbrella to include professional services.

“We cannot get there if we continue to lug this mounting, looming, all-consuming pension debt with us. This is our moment to solve this problem. We have to do it now. We cannot keep looking past the obvious,” she said.

“Yes, there are tough solutions. Yes, there are tough choices that have to be made. Yes, they involve putting ourselves at political risk. But I ran for change. I didn’t run to perpetuate myself in elected office forever. And if it means that I will sacrifice myself politically, so be it. But we must do this now.”

Toward that end, Lightfoot said she is creating a first-ever Council of Economic Advisers. She described it as a “team of experts” — municipal finance wizards, labor economists and demographers — to assist in the search for what she called “non-partisan solutions to our economic challenges.”

The mayor noted that some in Friday’s audience had been “issuing the clarion call for us to do something about our pension liabilities, but we have lacked the political will to make it happen.”

“We cannot keep asking taxpayers to give us more revenue without the structural reforms that are fundamentally necessary to make our city and our state run better. Now is the time to act,” she said, pointing to her plan to privatize the city’s $100 million-a-year workers compensation program and end “the corrosive practice of aldermanic prerogative.”

Former Mayor Rahm Emanuel risked his own once-formidable political capital by identifying dedicated revenue sources for all four city employee pension funds.

He more than doubled Chicago’s property tax levy for police, fire and teacher pensions; pushed through two telephone tax hikes for the Laborers Pension Fund; and phased in a 29.5 percent surcharge on water and sewer bills to bankroll the Municipal Employees pension fund, the largest of the four.

He persuaded the Illinois General Assembly to give the Chicago Public Schools a $450 million cash infusion and bankroll teacher pensions going forward.

But even with all of that — and hundreds of millions more in tax, fine and fee hikes, and budget cuts — he only managed to chip away at the rock.

The Civic Federation reported earlier this year that Lightfoot was staring down the barrel of an immediate $277 million spike in pension payments — payments that will rise by $1 billion in 2023 — as a five-year ramp to actuarial funding ends and the road to 90% funding begins.

The corporate fund has a two-year gap of at least $613.9 million — even before factoring in the cost of police and fire contracts, retroactive pay raises for the rank-and-file and the 18-month jump in police salaries for 1,000 newly hired officers.

The mountain of debt heaped on Chicago taxpayers continues to climb, with debt service payments to match. So do settlements and judgments tied, primarily, to allegations of police wrongdoing.

Shortly before Emanuel left office, his Chief Financial Officer, Carole Brown, revised the first-year deficit upward to $700 million after acknowledging the four city employee pension funds had fallen short of the assumed 7% return on investments.

But days before taking office, Lightfoot said that $700 million figure is “worse than that.” She’s waiting for the annual city audit before getting more specific.

During the spring session, the new mayor managed to get the Chicago casino that has eluded her predecessors for decades by dropping her demand for municipal ownership and agreeing to accept just a one-third share of the proceeds.

She also fended off efforts by ride-hailing giants Uber and Lyft to preclude the city from raising ride-hailing fees.

But Lightfoot got no direct help to close her own budget shortfall, nor did she get relief from the city’s pension crisis.