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Even after reform, pension debt will require tax hikes

The real issue in this year’s race for the Illinois governorship is not whether to reduce property taxes, or whether to let the “temporary” component of the income tax expire.

Reducing property taxes would leave Chicago with even less ability to fund its pensions. Letting the “temporary” income tax component expire would leave Illinois in the same situation. Either of those steps would take us in the wrong direction.

Reform and funding go hand in hand. Assume for the moment that the state pension reform law is upheld in court, and that the deal Mayor Emanuel has made with two Chicago pension funds is also signed into law and upheld. Suppose he makes other similar deals with respect to the other Chicago pension funds. Toss in the supposition that Bruce Rauner’s proposed switch to “defined contribution” plans — a good idea — were also somehow enacted and sustained.