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Rahm Emanuel's pension plan stalls in House after Madigan predicts vote

Illinois Speaker House Michael Madigan D-Chicago listens lawmakers during House committee hearing constitutional amendment protect voters against discriminatiIllinois State Capitol

Illinois Speaker of the House Michael Madigan, D-Chicago, listens to lawmakers during a House committee hearing on a constitutional amendment to protect voters against discrimination at the Illinois State Capitol Tuesday, April 1, 2014, in Springfield, Ill. A task force appointed by Gov. Pat Quinn to scrutinize Chicago's transit agencies says it has unearthed more evidence that Madigan directed Metra to hire and promote certain candidates. The new report concluded Madigan recommended 26 people for jobs, promotions and raises at Metra. (AP Photo/Seth Perlman)

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Updated: May 5, 2014 8:33AM



SPRINGFIELD — In a development laced with political intrigue, Mayor Rahm Emanuel’s plan to reel in city pensions stalled in the Illinois House Wednesday despite Speaker Michael Madigan’s prediction of a floor vote after it had cleared a House committee earlier in the day.

While not dead, the package affecting the city Municipal Employees and Laborers funds hit several unexpected snags, starting with Republicans.

The GOP, supporters of past pension deals in Springfield, positioned itself against this one, touting Emanuel’s plan as a de facto $750 million property tax hike even though the city had advertised a property-tax hit of just one third of that amount.

Madigan, D-Chicago, steered the legislation through the House Personnel and Pensions committee Wednesday morning and told reporters after the panel’s 6-4 vote that he intended to seek a vote of the full House later in the day. In a closed-door caucus meeting immediately after the committee vote, the speaker told his members the same thing, sources said.

Early Wednesday evening, Madigan spokesman Steve Brown shed little light on the reasoning behind the abrupt change of plans but declined to pronounce the legislation dead. He offered no sense of when the measure might surface on the House floor for a vote.

“They continue to work on a roll call. When there’s a good confident feel the votes are there to pass the bill, they’ll call the bill,” Brown told Early & Often, the Chicago Sun-Times political portal.

Asked why the speaker had predicted a vote and then backed away, Brown said, “He was hopeful there would be a vote. That was his intention, and the conversations he’d had with the city staff people who were here. But obviously, it didn’t quite work out that way.

“I’m not sure I fully understand all that’s transpired,” Brown continued. “You had a variety of different positions by Republicans from ‘We’re all for this’ to ‘We have no votes’ to ‘Maybe we have a few votes.’ Obviously, it would be good to have a good, bipartisan roll call.”

When it became clear the big lift to pass the bill wouldn’t be shared with Republicans, rank-and-file city Democrats appeared to get cold feet with the property-tax component. Others privately expressed worry about opposition to the bill from the Chicago Teachers Union, which last month nearly unseated state Rep. Christian Mitchell, D-Chicago, in a bitter primary in which his December support for a state pension package became a central issue.

And Emanuel, who spent part of his day with President Barack Obama in Chicago, didn’t appear to be aggressively working the bill Wednesday, even though he dispatched a delegation to Springfield that included his deputy mayor, Steve Koch, corporation counsel Steve Patton and others to testify to House and Senate committees about the bill.

One House Democrat from the city told Early & Often that no one had formally reached out from the mayor’s staff to make a personal pitch for the bill, an oddity given the magnitude of what Emanuel is asking state lawmakers to do on his behalf in Springfield, particularly if Republicans are MIA on the bill.

“Almost all the pension bills have passed with bipartisan support,” state Rep. Elaine Nekritz, D-Northbrook, chairwoman of the House pension committee. “If the Republicans are going to be off because of the tax component, it feels like a significant hurdle to get 60 Democrats to support a major pension-reform bill.”

While successful roll calls have been put together on a state pension package and ones that involved the Chicago Park District and Metropolitan Water Reclamation District, this one is different because of the property-tax component, Nekritz said.

Madigan’s legislation would authorize the City Council to levy $50 million more during each of five years, starting in 2016, to devote toward city pension costs. By year five, that tax levy would stand at $250 million more than today, but Republicans added up all of the revenue collected during that period and dubbed Emanuel’s handiwork as a $750 million property-tax increase that they wanted no part of.

“A $750 million property tax-increase is the last thing we need in Illinois,” said Rep. David McSweeney, R-Barrington Hills, who voted against Madigan’s legislation in committee. “This is outrageous. This is going to kill jobs. I oppose this tax increase.”

During committee, Madigan said he was prepared to amend his legislation to soften the property-tax mandate on the City Council by making it merely an option, not compulsory. That amendment wound up being tacked onto his bill Wednesday afternoon.

“I think it’s important to acknowledge that we’re here today, saying we acknowledge the problem and we’re prepared to do the tough thing, which is to raise taxes to solve the problem,” Madigan said during Wednesday’s hearing.

The proposal was opposed by unions, who said the plan amounts to a “sweeping diminishment” of pension income for the 57,000 city workers and retirees affected by the changes, which include cutting annual annuity increases, hiking the retirement age for some and seeking higher contributions from the current workforce.

Kurt Hilgendorf, a lobbyist with the CTU, testified against the legislation, saying it imposed “significantly deeper cuts” than the state pension package the Legislature passed and Gov. Pat Quinn enacted last December. That plan is now being challenged by a coalition of public-sector unions.

“We think this bill is even more unconstitutional,” said Hilgendorf, whose union represents about 10,000 current and retired school clerks or teachers assistants in the city municipal pension fund.

In another oddity in a day of full of them, Madigan would not vouch for his own bill’s constitutionality when asked about the unions’ contention his legislation violated the pension clause of the Illinois Constitution.

First, asked why he thought it was constitutional, the speaker said, “I’d leave that up to whatever court entertains the litigation that’s filed against the bill. I’m not offering my legal opinion.”

Pressed then on whether that meant he had doubts about its constitutionality, Madigan shot back, “I didn’t say that. I’m not offering a legal opinion. I’m the sponsor of the bill. I didn’t offer any legal opinions on Senate Bill 1. I’m the sponsor of the bill.”

Meanwhile, at a time in the day when it still seemed like his pension plan was on a fast-track in Springfield, Emanuel said he is open to new ideas — including using the jackpot of revenue from a long-sought Chicago casino — to shore up police and fire pension funds.

Emanuel was on the hot seat to explain what revenue he plans to use for police and fire, now that his plan to raise property taxes by $250 million and employee contributions by 29 percent to shore up two other city employee pension funds has been introduced in Springfield.

“You guys want to jump ahead. I have to get this over the goal line and finish it to give our retirees and our workers the certainty that they lack today,” the mayor said after Wednesday’s City Council meeting.

“When that’s done, I’m always interested in peoples’ [revenue] ideas they want to put forward. ... We haven’t come to an understanding [with police and fire]. ... I can’t tell people something I don’t know because we don’t know that yet. And I’m ready to work with anybody to find common ground. ... It has to have reform and revenue together. That has been the winning combination.”

Until now, Emanuel has talked about using a Chicago casino that’s been on the city’s wish-list for nearly 25 years for school construction and other infrastructure projects.

But, now that he’s hit the property tax so hard to shore up the Municipal Employees and Laborers pension funds, the mayor was asked whether he would be open to the idea of using casino revenues to stabilize police and fire pension funds.

“I’m open to any idea. That will be an idea. I know that Chairman [Carrie] Austin had an idea,” he said, refusing to rule out yet another property tax increase.

“My first goal: Secure the pension for our workers in the Laborers and Municipal. That’s the largest fund with the most retirees and the most workers. ... I’ll then turn my attention and continue to have conversations that bring the balanced approach of reform and revenue together.”

Next year, Chicago is required by state law to make a $600 million contribution to stabilize police and fire pension funds that have now have assets to cover just 30.5 percent and 25 percent of their respective liabilities.

The mayor wants the General Assembly to put off the balloon payment until 2023 to lift the sword hanging over Chicago taxpayers. The Fraternal Order of Police is dead-set against the idea.

Chicago aldermen will be forced to run for re-election on a platform of five-straight years of $50 million property tax increases. They want Emanuel to steer clear of the property tax for police and fire. They’re relieved to hear him say he’s open to using casino revenues — or any other idea they have.

“If there was another way to do this besides property tax, I’d jump up and down like Ald. [Richard] Mell did on the desk” the night Eugene Sawyer was elected acting mayor, said Budget Committee Chairman Carrie Austin (34th).

“If we could find other revenue sources — be it a casino, taxing [medical] marijuana, taxing some new shoes, whatever else — where we can generate the kind of money where the public doesn’t have to bear the brunt of that burden, then I’m for that.”

Dave McKinney reported from Springfield. Fran Spielman reported from Chicago.



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