Brown: Bring out the air bags for city pension rescue plan

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The city of Chicago’s last chance for finding a semi-soft landing to its pension crisis appeared to fade away Tuesday as the Illinois Supreme Court looked askance at Mayor Rahm Emanuel’s plan to save two of its troubled pension funds.

Just as they were when state officials argued they had found the magic legislative end run to the Illinois Constitution’s strict pension protection clause for public employees, the justices were tough in their questioning of City Corporation Counsel Stephen Patton, signaling that they’re no more impressed by the city’s effort to thread the needle.

Tough questions aren’t always an indication of how a court will rule, but when coupled with the court’s earlier ruling overturning the state’s pension reform efforts, this would seem a good time for everyone to buckle up in anticipation of when they do.

There is no soft landing to be had, mind you, only a crash of unknown severity, but Emanuel’s plan to trim cost-of-living increases for pensioners held out hope that all might survive impact. Now, I’m not so sure.

You can’t blame the guy for trying. At least, I don’t.

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The city workers and retirees from Municipal Employees and Laborers pension fund who filed suit to protect their benefits certainly didn’t appreciate the mayor’s efforts. While I completely understand where they’re coming from because reneging on pension promises is unfair, the day may yet arrive when they wish this option was still on the table.

The failure of the mayor’s plan would seem to leave two main paths forward for the city.

Either it finds some way to come up with the money it owes to the pension funds, which would require painful new or higher taxes on top of the recently enacted record property tax hike, or it allows the funds to slowly run out of money over the next decade or so.

And then at the end of that grim rainbow we find out what happens when a municipal pension fund goes bankrupt.

Theories abound on that score, including Emanuel’s, which holds that city taxpayers would not be responsible for the bankrupt pension fund, leaving retirees with 30 percent of their promised benefits. That’s one of the points that drew skeptical questioning Tuesday from Justice Mary Jane Theis, a Chicago Democrat.

More likely is that taxpayers are left holding an even bigger bill, although at that point, the pensioners and other city creditors may be in line for a haircut as well.

Insolvency would come to a head far enough in the future that it would no longer be Emanuel’s problem to solve. Unfortunately, that’s the approach former Mayor Richard M. Daley took, allowing the pension situation to evolve from big problem to unmitigated disaster on his watch, knowing that he would never pay the political price.

Again, it’s to Emanuel’s credit that he’s at least tried to face the situation, even if his solutions haven’t made everybody happy.

There may be other options available. State Sen. President John Cullerton still has his own untested legal theory on how to cut back public employee pension benefits without violating the constitution, although nobody seems to be in any hurry to help him push it through the General Assembly, in part because it won’t save as much.

There also could be some middle ground where the city puts enough additional money into the pension funds to push the day of reckoning a little farther into the future and declare the problem solved — for now.

That’s pretty much what they did with the property tax increase earmarked for the police and fire pensions, which relies on a more lenient payment schedule, so much more lenient that one of the bond rating agencies warned last week that it will make the city’s overall financial problems worse before they get better.

Moody’s, which issued that warning, was so unimpressed that it made it known that the best possible outcome from its viewpoint would be for Gov. Bruce Rauner to veto the city’s police and fire pension deal, forcing the mayor to come up with even more money.

Not even Emanuel’s Hollywood friends could write a happy ending to this story.

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