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Progressive Caucus says new revenue other than property tax needed to solve Chicago’s pension crisis
Chicago’s fast-approaching pension crisis should be solved—not by cutting employee pensions and imposing annual property tax increases, but by finding “new sources of revenue,” the City Council’s Progressive Caucus said Friday.
Mayor Rahm Emanuel is struggling to close a $338.7 million budget shortfall that will balloon to $1 billion next year without a painful mix of new revenues and employee concessions.
That’s when the city is required by state law to make a $600 million contribution to stabilize police and fire pension funds that now have assets to cover just 30.5 and 25 percent of their respective liabilities.
Emanuel wants the Il. General Assembly to impose annual property tax increases on Chicago homeowners and businesses, but put off the balloon payment for police and fire pensions until 2023 to give the city and its unions time to hammer out employee concessions.
On Friday, the City Council’s Progressive Caucus staked out a dramatically different position.
In a statement, the eight-member Caucus argued that the “manufactured crisis” was created by “decades of failure” to make “timely, regular and full payments” to city employee pension funds.
“It is a failure arising from mismanagement and possible corruption in the oversight of those funds,” the statement said.
The statement goes on to say that it would be both “immoral” and damaging to Chicago’s economic stability to cut employee pensions.
“A reduction in retirement income means they have less money to support small businesses, keep their homes up and take care of themselves and their families,” the statement said.
“We submit that this is a quality-of life impact upon the entire city—not merely upon those directly affected. Moreover, pension cutting would be a blot on the reputation and credibility of our city and its ability to manage its affairs with integrity.”
Instead of supporting Emanuel’s plan for employee concessions and annual property tax increases, the Progressive Caucus proposed that a panel of city employees, fund managers and elected officials devise a plan to “dig out of this mess.”
The statement made no mention of the commuter tax on suburbanites who work in the city that the Grassroots Collaborative favors and Emanuel has ruled out. It simply said, “This plan must include identifying new sources of revenue that do not rely on the property tax.”
The statement was jointly released by eight aldermen: Bob Fioretti (2nd), Leslie Hairston (5th), Roderick Sawyer (6th), Toni Foulkes (15th), Ricardo Munoz (22nd), Scott Waguespack (32nd), Nick Sposato (36th) and John Arena (45th).