Pension property tax hike no sure thing in City Council
BY FRAN SPIELMAN City Hall Reporter April 4, 2014 1:51PM
5-5-10 Ald Patrick O'Connor before the zoning comittee meeting in the city council chambers where the topic was the Pullman Park Development that will be anchored by a Walmart store. Brian Jackson/Chicago Sun-Times
Updated: May 6, 2014 6:10AM
Mayor Rahm Emanuel’s plan to raise property taxes by $250 million over five years to shore up two of Chicago’s four city employee pension funds faces an uphill climb in the City Council, even if it clears the Illinois General Assembly, the mayor’s floor leader said Friday.
The surprisingly frank and gloomy assessment from Ald. Pat O’Connor (40th) stems from three political realities: the aldermanic election is 10 months away; union leaders are either sitting on the sidelines or adamantly opposed, and City Council votes to raise property taxes are a rarity.
Mayor Richard M. Daley had a political phobia to raising property taxes — and steered clear of doing so during 15 of his 22 years in office. Emanuel did the same during his first three budgets — knowing full well that he would have nowhere else to turn to solve the city’s pension crisis.
“For many years, the city has not had to increase its property tax level. It’s a vote that a lot of folks in the City Council have never taken or have taken very few times. It’s not an easy vote. The timing is difficult,” O’Connor said Friday.
“It’s a tough sell with a lot of people. There will be work to do if this comes back to the city. I don’t think [the 26 votes needed for passage] will be there without some significant work.”
It doesn’t help that Emanuel is all alone out on the limb, O’Connor said.
None of the 30 union leaders who signed onto the deal have stepped forward to lead the charge for it because it also raises employee contributions by 29 percent while scaling back cost-of-living increases and eliminating them altogether for four years.
And police, fire and teachers unions whose pension funds are also in danger of going broke are actively working against the agreement, branding it illegal and vowing never to agree anything close to those terms.
“It’s a very weird situation. You’ve got pensioners and union people who don’t like the deal but wouldn’t like to see their pensions erode. You’ve got the city trying to protect the pensions of people throwing rocks at them every day. We’re trying to save the funds while the unions who represent them are outraged and dead seat against this,” O’Connor said.
Further complicating the situation is the fact that yet another property tax increase — or some other form of new revenue — will be needed to shore up police and fire pension funds that are even closer to going belly up than the funds Emanuel is trying to save.
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 liabilties.
On Friday, O’Connor urged the General Assembly to put off the balloon payment to lift the sword hanging over Chicago taxpayers and give the mayor time to negotiate a similar deal with police and fire unions.
The pension bill now pending in Springfield does not address police and fire.
“We have a huge [$600 million] deadline looming out there. Either we hit the property tax ourselves or the state will keep the money we get from them. So, it would be my hope that the state would find a way to postpone this deadline and give us an opportunity to work out an arrangement with police and fire similar to the other unions,” the alderman said.
O’Connor said he was encouraged to hear newly-elected Fraternal Order of Police President Dean Angelo Sr. say he wanted to chart a different course with Emanuel and urge the mayor to put a retroactive pay hike back on the table as a show of good faith.
The mayor and Angelo talked Thursday and it was a “good conversation,” City Hall sources said.
“We’ve always been willing to put the retro back on table if we’re in serious discussions about reaching an agreement. But nobody expects it to be back on table in exchange for nothing,” O’Connor said.
Earlier this week, Emanuel said he would be open to new ideas — including using the jackpot of revenue from a long-sought Chicago casino — to shore up police and fire pension funds.
On Friday, O’Connor was asked whether the mayor should steer clear of the property tax for police and fire now that he’s hitting it so hard to save the Municipal Employees and Laborers pension funds.
“That certainly would be the preference,” he said, without suggesting other sources of revenue.
The mayor’s pension plan appeared to be on the fast track in Springfield, only to hit a roadblock from Republican and Democratic lawmakers alike.
House Minority Leader Jim Durkin, R-Western Springs, has said he’s open to working with Emanuel, but urged the mayor to dump the property-tax language from the bill entirely. That would force the mayor and City Council to wear the political jacket alone.