Gov. Bruce Rauner on Friday vetoed a bill that would have saved Chicago $843 million over five years and staved off what Mayor Rahm Emanuel has called an “unnecessary tax increase” — by giving the city 15 more years to ramp up to a 90 percent funding level for police and fire pensions.
Top mayoral aides were livid. They likened it to a “declaration of war” on Chicago and Emanuel, akin to President Gerald Ford flatly declaring in 1975 that he would veto any bill calling for “a federal bail-out of New York City” and instead proposing legislation that would make it easier for the city to go into bankruptcy.
Rauner had until Monday to sign or veto the bill. If he had done nothing, the legislation would have automatically taken effect and saved Chicago $220 million this year and $843 million over five years.
In vetoing the bill, Rauner said it was nothing other than kicking the can once again down the road for pension payments and would put an even greater financial burden on Chicago taxpayers in the long term.
Emanuel had repeatedly and emphatically appealed to his old friend, Rauner, to avert the need for an “unnecessary tax increase” in Chicago by signing the bill.
But that appeal failed, further fraying the relationship between the once close friends.
Earlier in the day, Emanuel, anticipating the veto, made no effort to contain his anger during a taping of the WLS-AM Radio program, “Connected to Chicago,” to be broadcast at 7 p.m. Sunday.
“You have a governor who said he was for a property tax freeze, who is now, through a veto, gonna force a property tax increase. You have a governor who put this in his own pension proposal and now, he’s vetoing it. You have a governor who said he’s for local control, and the first bill on his desk that reflects local control, he vetoes it. And you wonder why people don’t trust him,” Emanuel said.
“Part of being a leader is people being able to work with you and trust you . . . There’s a reason nobody trusts you. It’s because there’s constant inconsistency. And it’s not an accident that nothing’s getting done in Springfield under his tenure.”
The mayor didn’t give an inch when it was suggested that Rauner may be using the police and fire pension bill as leverage to get what he really wants: his so-called “Turnaround Agenda” of pro-business, anti-union reforms.
“Chicago taxpayers are not a pawn in your failed agenda . . . So far, everything is about hostage-taking. Maybe to break the logjam, the governor should say, ‘I’ll make the first move of good will to anybody anywhere and the good will be to Chicago taxpayers, to Chicago Police and Fire.’ But he hasn’t decided to do that,” he said.
After the veto, Emanuel said in a statement: “With a stroke of his pen, Bruce Rauner just told every Chicago taxpayer to take a hike. Bruce Rauner ran for office promising to shake up Springfield, but all he’s doing is shaking down Chicago residents, forcing an unnecessary $300 million property tax increase on them and using them as pawns in his failed political agenda.”
And if anyone had missed the point, mayoral spokesman Adam Collins later added:”The governor has a bad budget meeting this morning and now he’s taking out his frustration on the taxpayers on Chicago. It’s completely political and completely reckless.”
Rauner issued his own scathing statement to explain why he vetoed the bill: “This bill continues the irresponsible practice of deferring funding decisions necessary to ensure pension fund solvency well into the future. The bill effectively makes Chicago taxpayers borrow from the pension funds at an additional cost of $18.6 billion. It’s a game politicians like to play with taxpayers’ dollars by delaying payments today and forcing future elected officials to deal with pension funding issues tomorrow. As all know by now, that practice led to our current pension woes across state and local pension systems. Chicago police retirees are rightfully opposed to the bill. Instead of doubling-down on our past mistakes, we must learn from them. In vetoing this bill, I stand with all Chicago taxpayers who will be saddled with higher future pension contributions if the bill were to become law.”
Now, the focus will turn to the mayor’s attempt to override the governor’s veto. It won’t be easy.
The bill passed the Illinois Senate with a veto-proof majority of 38 votes, two more than needed.
In the House, it’s another story. There, the bill got 66 votes, five short of the 71 votes needed for an override.
That’s means it’ll be an uphill climb.
“A handful of members were absent for the vote. We have to make sure they get there. A few Democrats voted `no.’ We have to convince them to vote ‘yes,’ “ said a top mayoral aide, who asked to remain anonymous.
Asked to assess the chances, the Emanuel aide said, “It’s a hard thing to handicap. The unknown is what happens during the last couple days of the session. I’d say we have a 50-50 shot.”
The Chicago Sun-Times reported last month that Illinois Senate President John Cullerton (D-Chicago), Emanuel’s closest ally in Springfield, had ended 10 months of cat-and-mouse, by sending the legislation to the governor.
Cullerton had been holding the bill — approved by the House and Senate last spring — amid concerns that Rauner would veto the legislation to squeeze cash-strapped Chicago and strengthen his own hand in the budget stalemate over the governor’s demand for pro-business, anti-union reforms.
The delay has already been costly to Chicago taxpayers.
It forced Emanuel to use $220 million in “short-term bridge” financing to make a state-mandated payment to police and fire pension funds that’s higher than his tax-laden 2016 budget anticipated because the police and fire pension reform bill has not been signed into law.
Before raising property taxes by $588 million for police and fire pensions and school construction, aldermen eager to bite the bullet and get it over with demanded to know why Emanuel wasn’t proposing an even bigger increase instead of rolling the dice.
Aldermen were concerned about Emanuel’s risky assumption that Rauner would sign the police and fire pension bill.
Chicago taxpayers would still be on the hook for $619 million in payments to the two funds this year — more than double the city’s prior payment. But that’s $220 million less than the city would have been forced to pay and an $843 million break over the next five years.
The City Council’s questions turned out to be prophetic.
Civic Federation President Laurence Msall called the $220 million borrowing an “unfortunate, expensive, yet forseeable development” Emanuel should have anticipated by putting a “contingency plan” in place.