Running for re-election is tough enough these days, given the ornery, anti-incumbent mood of the voting public. Try asking for four more years on a platform of raising property taxes by $250 million over five years.
That’s the political dilemma facing Chicago aldermen now that Mayor Rahm Emanuel has outlined his pension deal with unions whose 31,000 active employees and 19,000 retired members rely on the Municipal and Laborers pension funds for their retirement.
That’s apparently why Chicago aldermen cringed and mostly ran for cover Tuesday when asked whether they were prepared to support the mayor’s plan.
Nearly every one of the alderman approached refused to talk about it, claiming they had not been briefed on a plan meticulously outlined by both major Chicago newspapers.
One of the only exceptions was Ald. Carrie Austin (34th), the always outspoken chairman of the City Council’s Budget Committee.
“That’s a bitter pill. I can’t say that it isn’t—even as a homeowner myself. But if we don’t do something responsible, I don’t want to say we’ll be like Detroit. But we’ll be in terrible shape. [And] it would not be fair to our employees,” Austin said.
“Sometimes, responsibility hurts. This is what we should do to be a responsible council—not duck from our responsibility because it’s more than heavy lifting. It’s back-breaking.”
Austin was asked whether she can get re-elected on a platform of five straight years of property tax increases that will cost the owner of a home valued at $250,000 roughly $58 more a year, or $290 over the five-year period.
That’s on top of expected increases for the Chicago Board of Education and Chicago Park District — and before there’s any solution to crisis involving police and fire pension funds.
Next year, Chicago is required by state law to make a $600 million contribution to stabilize police and fire pension funds that now have assets to cover just 30.5 percent and 25 percent of their respective liabilities.
“I believe I could because I’m gonna be honest,” she said.
Austin’s ward is also home to scores of white collar and building trades employees, who will be asked to share in the sacrifice.
They would see their annual pension contributions rise by one-half of 1 percent over the same five-year period beginning in 2015.
Those employees currently contribute 8.5 percent of their annual paychecks to their pensions and are not eligible for Social Security. By 2019, they would contribute 11 percent.
Based on an average salary of $60,000, the increased contribution is expected to cost employees $300 more a year.
But that’s not the only sacrifice city employees will be required to make. They will also be asked to forfeit compounded cost-of-living adjustments that have been a driving force behind the city’s pension crisis.
Instead of getting annual 3 percent cost-of-living increases compounded every year, they will get a simple 3 percent increase or 50 percent of the consumer price index, whichever is less.
And they will get no increase in retirement benefits at all in 2017, 2019 and 2025. In addition, employees will be required to wait two years after retirement before becoming eligible for cost-of-living increases. That’s twice as long as they are required to wait today.
“No pension at all would be unfair. For them to still have reliability on having a pension is what’s important. If that means paying a little bit more, I think we should stop complaining about that part because, if you have to pay a little bit more in order to have [a pension], I don’t think they would object to that degree,” Austin said.
“If it’s `I don’t want to put any more in,’ then you don’t want to get anything out. That’s the way I look at it.”
Ald. Ariel Reboyras (30th) was less inclined to swallow the bitter pill of five straight years of property tax hikes, knowing that even higher taxes will be needed to put police and fire pension funds on the road to solvency.
“Just thinking about it, it’s nerve-wracking. It doesn’t sound good. Very hard. It’s an election year as well. Tough. Very tough,” Reboyras said.
More than a dozen other aldermen took a pass on the pension hot potato.
Now that the mayor is turning to higher property taxes to shore up two pension funds that represent 53 percent of the city’s unfunded pension liability, the question is what revenue source is left for police and fire.
Like Emanuel, Austin dodged the question. And she refused to rule out yet another property tax increase for police and fire, even after hitting it hard to shore up the Municipal and Laborers pension funds.
