Senate passes Preckwinkle's county pension reform

SPRINGFIELD — Cook County Board President Toni Preckwinkle’s pension-reform package passed the state Senate on Tuesday despite opposition from some public employee unions that contended her plan is unconstitutional.

The legislation, sponsored by Sen. Kwame Raoul, D-Chicago, passed 36-16 and now moves to the House, but its lightning-quick progression through the Senate came without clarity on how exactly the county intends to pay for Preckwinkle’s plan.

“If we do nothing over time, in 20 years, in 24 years, the [pension] fund will be totally insolvent,” Raoul said.

Before Tuesday’s Senate vote, Preckwinkle appeared before the Senate Executive Committee to outline the plan and was pressed by Senate Minority Leader Christine Radogno on whether she intended to raise property taxes to handle the $146 million tab the county will face for fiscal 2016.

“We did not raise property or sales taxes,” Preckwinkle responded, touting her record in shutting down talk of a sales tax increase while closing a budget gap of $487 million in her first year.

“As I said, we reduced the sales tax. So we’re going to be very creative about making government more efficient, just as we have for the last three and a half years. But everything is going to be on the table. We’re going to make the commitment whatever way we have to, including our general revenues,” she said.

Her plan was met with opposition from the American Federation of State County and Municipal Employees Council 31, which characterized the pension cuts contained in Preckwinkle’s plan as unconstitutional and vowed to challenge the measure in court if it passes the General Assembly and is signed into law by Gov. Pat Quinn.

“For many current workers, in particular, this is significantly even more draconian than the reductions they would have seen in the city bill or under SB1,” said John Cameron, political director of the American Federation of State, County and Municipal Employees, referring to pending city pension legislation awaiting Quinn’s signature and a pension law for state employees and retirees that is now being challenged in court.

“This is not an imminent crisis that has to be resolved in the next four days by this body,” he said. “We particularly feel that this is not ready for prime time.”

Earlier in the day, aides to Preckwinkle offered a briefing on the plan.

Ivan Samstein, the county’s chief financial officer, said officials will continue trying to “make county government more efficient” to handle the $146.9 million increase in county contributions for the 2016 fiscal year contained in the proposal.

Tax increases would be a last resort, Samstein said — but they’re not off the table.

Preckwinkle has “demonstrated that she’s capable of looking at all options without having to rely on increased taxes and, in fact, moving the opposite way to tax reduction,” Raoul said. “I think she’s developed a reputation — deservedly so — of not trying to stick it to taxpayers.”

Raoul filed an amendment outlining Preckwinkle’s plan in the Senate on Tuesday, less than a week before a scheduled May 31 legislative adjournment.

He said she told lawmakers in both chambers the plan has been negotiated with the county’s labor unions and, without it, the county’s pension fund is headed toward insolvency.

“In terms of all of the pension reform plans that have been debated, this is one that really is sensitive to retirees,” Raoul said.

Anders Lindall of AFSCME Council 31 said county officials walked away from negotiations “several weeks ago.” Lindall said the cuts discussed during those negotiations — before Preckwinkle’s proposal was filed in Springfield — were unfair and unconstitutional.

A Preckwinkle spokeswoman said unions representing 60 percent of the county’s employees have come out in favor of the plan, including its largest union, the Teamsters.

Laurence Msall, president of the Civic Federation, said his group is pleased that Cook County has moved forward with a pension reform proposal that he called a “step in the right direction.” But he also noted that it’s not clear how the county will cover its $146.9 million contribution increase — nor, he said, has a full actuarial analysis been made available to the public.

County officials say the pension fund could be insolvent by 2038 or sooner — depending on employee withdrawal rates and investment returns.

The pension system, Samstein said, is funded at a 60-40 ratio — with the county paying 60 percent and employees paying 40 percent.

In the proposal, Samstein said officials tried to spread the pain in a similar way, with 60 percent of the funding coming from the county, 20 percent from employee contribution increases and another 20 percent coming from benefits.

Employee contributions would be set at 9.5 percent in 2015 and 10.5 percent in 2016, and the retirement age would rise for various categories of employees, according to the proposal. Employee contributions are now set at 9 percent for sheriff’s police and 8.5 percent for other workers.

The county’s maximum contribution level would rise to 220 percent of employee contributions, up from 154 percent. That would include 190 percent for pensions and 30 percent for a separate health care trust.

The county also wants to make money other than property taxes available to make its pension payments.