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City’s pension freight train is here

Mayor Rahm Emanuel presided over city council meeting which discussed 2013 city budget.  Al Podgorski~Chicago Sun-Times

Mayor Rahm Emanuel presided over the city council meeting which discussed the 2013 city budget. Al Podgorski~Chicago Sun-Times

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Updated: October 28, 2013 7:34AM

Time’s up, Chicago.

In just one year, Mayor Rahm Emanuel and the City Council will begin work on a 2015 budget that must cover a massive, $1.1 billion bill to cover public employee pensions, a $617 million increase over 2014. The leap is mandated by a state law designed to set the city’s grossly under-funded police and fire pension systems on a path to solvency.

A plan for dealing with this monstrous pension crisis is needed now, today.

That plan should not include — please, no — any significant delaying or deferring of those payments, an idea Mayor Rahm Emanuel pitched this week in an interview with the Chicago Tribune. A history of putting off pension payments is a key cause of the mess Chicago and the State of Illinois find themselves in today.

Here’s what the plan should include: benefits cuts, as Emanuel had strongly advocated for, and long-term new revenue, most likely a property tax increase, though a broader sales tax or a city income tax also are possibilities.

And by long-term we don’t mean starting in 2018, an idea floated in Springfield that conspicuously lines up with the end of a second and perhaps last Emanuel term as mayor. Benefit cuts followed quickly by new revenue can’t come soon enough.

Anyone who has looked closely at the city’s financial situation cannot honestly draw any other conclusion.

The police and fire systems respectively have only 31 and 25 percent of the funds needed to pay for promised benefits. Righting that ship, even after reducing benefits, is not possible without new revenue — unless Chicagoans are willing to live in a city without the most basic of services.

It appears Emanuel has come to that same conclusion, though he’s not interested in promoting it.

And we get why. Emanuel is pushing benefit cuts first, which is smart. Open the revenue door and the momentum toward a desperately needed pension cost-cutting bill in Springfield, which sets benefit terms for state and local pensions, is lost.

Gov. Pat Quinn had hoped to push legislators along in doing that difficult job by withholding their pay until they do, but a judge on Thursday ruled that stunt unconstitutional. That said, we understand a new pension cost-cutting plan for the state systems could emerge as early as next week.

Emanuel knows revenue must be part of the solution, even while he’s adamant that a big tax hike is out of the question. To fund next year’s pension bill and high bills for the foreseeable future, Chicago, as things stand now, would have to increase property taxes by nearly 50 percent or massively cut services.

Emanuel has made clear that is untenable. He does not exaggerate when he says a “caravan” of Chicagoans would pick up and head for the burbs.

But Emanuel appears willing to go for something smaller — and we don’t see how that can be avoided. In May, Senate President John Cullerton, after negotiating with the city, advanced a bill that would have both delayed the big police and fire pension payments until 2022 and instituted small property tax increases beginning in 2018. That’s almost five years down the road. Putting off painful necessities may be good for Emanuel politically but wrong for the city. As we said up top, the sooner the better.

Cullerton’s bill went nowhere and may simply have been an attempt to pressure the police and fire unions to negotiate. But the fact that the city was on board is telling.

The bottom line for pension reform in Chicago? A comprehensive plan today beats delaying any day.

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