Suburban mayors also urge state to pass pension reform
BY FRAN SPIELMAN City Hall Reporter email@example.com May 10, 2012 1:20PM
Updated: May 10, 2012 4:03PM
Mayor Rahm Emanuel on Thursday enlisted reinforcements in his battle for pension reform: 30 suburban mayors who warned of suburban bankruptcies without a comprehensive solution to the pension crisis.
“In California, they’ve literally had towns on the verge of bankruptcy for the very same reasons that have been outlined here,” said Skokie Mayor George Van Dusen.
“If something isn’t done, the map to the future is right there. The siren has been called. ... We are on the verge of bankruptcy.”
Palos Hills Mayor Gerald R. Bennett, president of the Southwest Conference of Mayors, said one of his “biggest fears” is that state lawmakers will “partially” resolve the state’s $80 billion pension crisis, then “walk away” without solving the suburban pension crisis they helped create by passing pension changes taxpayers cannot afford.
“They have put such an incredible burden on local governments that mayor after mayor — if they had a big box out in front of the doors in Springfield — are ready to tell them, ‘We’re gonna drop the keys to City Hall in that box. You guys have run the show for so long, maybe you’d like to run a city or village.’ That’s the financial crisis we all face,” Bennett said.
Any changes in the rules governing city or suburban pensions must by approved by the Illinois General Assembly.
Christopher Canning, president of the Village of Wilmette and the Northwest Municipal Conference, said residents of the North Shore suburb have quadrupled their contribution to police and fire pension funds since 2000. Still, unfunded liabilities have increased by $20 million during that time.
“That … is an unsustainable system. You pay more in and you get further and further behind,” he said.
Canning then endorsed three basic changes that mirror those proposed by Emanuel: “recalibrate” employee contributions; “re-size” the annual, three percent compounded cost-of-living increase for retirees and raise the retirement age to accommodate longer life expectancies. Some public employees can now retire at age 50 and collect a pension for longer than they worked for the municipality.
He also suggested consolidating the 638 separate police and fire pension funds across the state.
“If you drive down the cost of those, you will increase the fund balances and possibly be able to increase returns because of more investment opportunities,” Canning said.
For once, Emanuel didn’t have to do all the talking.
But when reporters asked whether he was willing to lease Midway Airport or devote some other new source of revenue toward solving Chicago’s pension crisis, the mayor was tight-lipped.
In 2010, a pension commission appointed by then-Mayor Richard M. Daley warned that Chicago taxpayers and city employees and retirees would have to share in the sacrifice.
“That’s not what I’m gonna do, No. 1. No. 2, unfunded obligations are $20 billion. If you know somebody who wants to buy Midway for $20 billion, will you call me? That’s not the numbers people are talking about. It doesn’t get you there,” Emanuel said.
He added, “We have a structural challenge. Revenue itself will not fix that….I’m not gonna get into anything like that about revenue until we face the facts.”
Earlier this week, Emanuel blindsided and infuriated the union leaders whose collaboration he had promised to seek to solve the pension crisis.
Instead of negotiating first with union leaders in Chicago, he went to Springfield to lower the boom. The following day, he sent a letter to city employees to soften the blow of the bitter pill he’s asking them to swallow: a 10-year freeze in cost-of-living increases for retirees; a five-year increase in the retirement age; a five-percent increase in employee contributions and a two-tiered pension system for new and old employees.
Labor leaders accused the mayor of pitting hardworking employees against taxpayers — by portraying a 150 percent increase in property taxes as the only alternative to employee concessions.