Pension crisis, ‘gorilla in the room,’ gets just one line in Emanuel inaugural address
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Mayor Rahm Emanuel made it a one-liner during a second inaugural address devoted almost exclusively to “preventing another lost generation” of young people.
But the “gorilla in the room” was as plain as day to the aldermen who joined the mayor onstage at the swearing-in ceremony Monday at the Chicago Theater.
In fact, the $30 billion pension crisis, which has dropped Chicago’s bond rating to junk status, has placed the city in such a precarious position that the mayor’s City Council floor leader has warned 13 rookie aldermen not to expect the political version of spring training.
“Normally the first couple months in City Council are very slow and very relaxed. He said, `Don’t expect that this time. It’s gonna be very difficult the next couple of months. We’re gonna have to pass legislation very quickly to deal with this financial situation,’ ” said 26-year-old Ald. Carlos Ramirez-Rosa (35th), the City Council’s youngest member. “I’m not surprised that the mayor didn’t address it because we know the gorilla in the room and we’re gonna tackle that gorilla.”
Ald. Pat O’Connor (40th), the mayor’s floor leader, said the rapid-fire votes that will be required to pull Chicago away from the financial cliff might even cancel the Council’s traditional August recess.
“I can say with great certainty that we’re not gonna wait for the budget cycle to confront some of these problems,” O’Connor said.
“It’s uncharted territory for all of us. What we see coming down the pike are ordinances and measures that will either be belt-tightening or revenue-enhancing.”
The Illinois Supreme Court’s decision to overturn state pension reforms has placed Emanuel’s plan to save two of four city employee pension funds in similar jeopardy. That triggered a downward spiral of events that saw Moody’s downgrade Chicago’s bond rating to junk status and do the same to the Chicago Public Schools and Chicago Park District. Standard & Poor’s and Fitch ordered lesser drops.
Moody’s action is expected to cost Chicago taxpayers hundreds of millions of dollars in penalties and borrowing costs, intensifying pressure to raise taxes and cut services that’s already off the charts.
On Monday, Moody’s issued a more detailed explanation of its downgrade, saying the move did not “signal an expectation that Chicago will declare bankruptcy or default on its debt.” It added: “We do believe, however, that the city’s pension-related challenges are significant and introduce speculative elements into the credit profile.”
As Emanuel was ignoring the pension crisis in his inaugural address, his financial team was attempting to finalize plans for a massive refinancing that would convert $800 million in variable-rate city debt to fixed interest rates.
Crain’s Chicago business reported Monday evening that the city had put off the first phase of that refinancing after the double-downgrade by Moody’s. But retiring Chief Financial Officer Lois Scott insisted that the Crain’s story was “incorrect.”
“We’re not putting off the closing. We’re keeping the same schedule of taking out all of the variable-rate debt. We’re just trying to select the best time for pricing the bonds to make sure we’ve got the best possible pricing for taxpayers,” Scott said.
“It’s not likely to go into June. It’ll either be this week or next to make sure we don’t have to pay more than we need to.”
In an affidavit filed in the state pension case, Scott portrayed any further downgrade in the city’s bond rating as having potentially devastating consequences.
She warned that it could potentially cost the city hundreds of millions of dollars in penalties and interest costs, “crowding out” funding available for other vital city programs.
On Monday, Scott said, “I stand behind what’s in the affidavit. . . . Whenever you get a rating downgrade, it has consequences. We’re evaluating what that means.”
Emanuel and the new Council must decide by December how to meet a state-mandated, $550 million payment to shore up police and fire pension funds — unless the Illinois General Assembly lifts the hammer.
CPS is on the brink of bankruptcy with a $9.5 billion pension crisis, a $1.1 billion budget deficit, a new teachers’ contract to negotiate amid the threat of a strike and a federal investigation that has forced Schools CEO Barbara Byrd-Bennett to take a paid leave of absence.
Emanuel could have devoted his entire speech to the pension crisis and nobody would have blinked an eye. Instead, he mentioned the “pressing pension and fiscal challenges” only once and said simply, “We have more work to do.”
Instead, he went straight for the poetry.
Before an audience that included his friend and mentor, former President Bill Clinton, Emanuel challenged every Chicagoan to help end “years of silence and inaction” that has “walled off a portion of” the city and left scores of young people in the poverty and despair that leads them to drop out of school and join gangs.
“The faces of these lost and unconnected young men are often invisible — until we see them in a mugshot as the victim or perpetrator of a senseless crime,” the mayor said.
“When young men and women join gangs in search of self-worth, we as a city must and can do better. When young men and women turn to lives of crime for hope, we as a city must and can do better. When prison is the place we send young boys to become men, we as a city must and can do better. . . . This is our challenge as a society and as a city. No longer can we tolerate leaving so many young people behind.”
In challenging Chicagoans to get involved, starting with a citywide “Night of Faith and Action” heading into the Memorial Day weekend, the mayor’s second inaugural address sounded a bit like President John F. Kennedy’s first with its, “Ask not what your country can do for you” appeal.
“Be a role model for the young people in your life. Share the values that made you who you are with someone who wants to grow up to be like you. Give an adolescent who was born without a prayer his first prayer at getting ahead. Find a way to let young men, invisible for too long, see hope belief and expectation in your eyes,” the mayor said.
Despite the dark cloud hanging over Chicago, the inauguration had the look and feel of a genuine celebration.
Clinton got a standing ovation. When the Apostolic Church of God Praise Team sang Hezekiah Walker’s “Every Praise,” Emanuel was tapping his toe, bobbing his head and grooving to the music. So was Clinton, who was seated right next to the mayor.
Later, the mayor recalled that that he would return to the church for that same uplifting song “every time I got low” during the grueling runoff campaign. He said he planned to invite the Praise Team to perform at his synagogue during Rosh Hashanah and Yom Kippur.
“You think I’m kidding?” the mayor said.
Emanuel also had a one-liner for the unidentified man in the crowd who shouted, “Nice!” at various points during the ceremony.
“President Clinton says you have a limited vocabulary, but a lot of enthusiasm,” the mayor said.
Before launching into the meat of his speech, Emanuel choked back tears as he thanked “my first love,” his wife Amy, their children, Zach, Ilana and Leah and his parents “who gave me the education and the values that have guided me throughout my life.”
The mayor’s decision to focus his entire inaugural address on a single subject – disconnected youth – came as a welcome surprise to at least one dignitary in attendance.
“He spoke to a lost generation. You very seldom hear someone of his stature on this occasion speaking to the issues that they’re confronted with,” said U.S. Rep. Bobby Rush (D-Ill.), who put aside differences with Emanuel to endorse the mayor’s re-election campaign.
“He’s not discussing city finances now. He’s discussing city funerals. I am really just so, so overwhelmed by the mayor’s message to the youth of this city. I believe that, behind that message is a commitment to bring about change in their lives in the future.”
Ald. Pat Dowell (3rd) said Emanuel “did the right thing” by making his second inaugural address, “hopeful and optimistic.”
But she said, “The reality is that, if we don’t get our fiscal house in order, he’s not gonna be able to provide the services or come up with the money to support those individuals and groups anyway.”