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Emanuel’s 2013 budget is calm before pension crisis storm

Updated: November 12, 2012 12:11PM

Mayor Rahm Emanuel’s 2013 city budget is the calm before the storm that could make everyone forget the worst blizzards in memory.

So feel free to savor the calm just a moment before stepping forth into the cold winds of reality.

For the second straight year, Emanuel has submitted a reasonable, responsible budget that faces up to the city’s financial problems.

Even better, this year’s budget proposal contains no new tax increases or fees of any sort, although it profits considerably from the ones he pushed through last year.

Hope you enjoyed that brief respite because it gets ugly from here on out.

As Emanuel himself cautioned Chicago aldermen in a warning that I’m certain he wanted all city residents to heed, the city faces huge tax increases or drastic service cutbacks in the near future if it doesn’t find a solution to the problem of how to fund billions of dollars in pensions promised to city employees.

What Emanuel didn’t say — and what many at City Hall are now coming to understand — is that the city will likely need a painful tax increase or some other new source of revenue to pay for a pension solution even if the mayor wins approval of the benefit cuts and employee contribution increases he has already proposed to the Legislature.

Pressed on this point during a meeting Wednesday with the Chicago Sun-Times’ editorial board, Emanuel danced around the question of how the city might come up with more money, saying the next step is up to public employee unions representing city workers.

“I’ve laid out my piece, and they’ll come back and we’ll have a discussion. That’s what a negotiation is about,” the mayor said.

“But what is the revenue source when the city is asked to put more money on the table?” persisted Sun-Times City Hall reporter Fran Spielman.

“That hasn’t been asked. People haven’t engaged in a conversation,” the mayor said. “But I’m not going to put more revenue on an old system that’s not working.”

It’s a question that ought to be asked by the City Council in the course of this year’s budget process, because the unions certainly will be asking — if they haven’t already.

There is a strong expectation the Illinois General Assembly will finally make a serious attempt at addressing the state’s pension funding crisis during a yet-to-be-scheduled lame duck session in January just before the newly elected class of legislators is seated. That’s always the easiest time in Springfield to take care of really painful legislative business, because many lawmakers are leaving office and won’t have to face the backlash of an unpopular vote.

It’s now pretty clear that Emanuel isn’t going to allow the state to resolve its own equally serious pension problems without also dealing with the city pension funds at the same time. Emanuel will have plenty of support in that regard from suburban and downstate municipalities that are concerned about the ever-increasing burden of paying for their own employees’ pensions.

That means this is all going to have to start coming together in the next few months.

“No one should underestimate the difficult choices involved in delivering the reforms we need to stabilize our pensions and our pension payments,” Emanuel told the aldermen. “But they pale in comparison to the alternative — eliminating all of the essential services that Chicago’s residents expect and pay for.”

I’ll have to admit I may have been among those underestimating the difficulty of those choices when I panned the mayor’s proposal last spring for a 10-year freeze in the cost-of-living increases for current retirees — a key element of his plan to reduce the unfunded liability in the city pension systems by 40 percent.

I still don’t like the idea of hurting existing retirees on fixed incomes, but I’m more and more persuaded that everybody is going to have to take part of the hit to solve this one.

What would be helpful is if the mayor offered — or aldermen demanded — an accounting of exactly how much the COLA freeze would save each pension fund, along with a menu of other possible benefit changes or contribution increases and how they would help.

Emanuel told the aldermen that if there are no changes to the pension system and they don’t cut services, “you and I would have to ask taxpayers to pay 150 percent more in property taxes.”

As a political practicality, that’s never going to happen, but a property tax increase of some magnitude is almost a certainty before this is over, unless the city comes up with a whole new tax or privatizes Midway Airport.

Enjoy the calm while it lasts.

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