Yesterday, which was the last day he had until the bill automatically became law via Secretary of State Jesse White’s office, Illinois Governor Pat Quinn signed a bill that would trigger pension reform for the Chicago Municipal Employees and Laborers pension funds. Although it would allow the Chicago Mayor Rahm Emanuel and the Chicago City Council to raise property taxes this year, it is a move that Quinn frowns on and that may not be necessary in 2014. In terms of how the new law will impact the affected employees:
• Starting in 2015, they will contribute ½ of 1 percent each year for 5-years (raising the contribution from 8.5 – 11 percent by 2019);
• They will not receive compounded annual cost-of-living adjustments. They will receive the lower of either a 3-percent increase of an increase that is half of the consumer price index;
• They will not receive any retirement benefit increases in 2017, 2019 or 2025; and
• They will also have to wait for 2 years after they are retired to become eligible for cost-of-living increases.
There is a lot going on in the background in what looks like a fairly straight-forward law enacting. As is typical, an issue of governance is actually a layered drama of political subplots. Such as:
• This became possible because of what may seem as an unrelated bill signing that allows the City of Chicago to increase the monthly surcharge on cell and landline phones from $2.50 to $3.90 and increase the transaction fee for prepaid cell phones from 7 to 9 percent;
• The additional $50 million generated by the phone bill increases will allow the City of Chicago to wait an additional year to consider raising property taxes;
• It buys the City of Chicago time to come up with additional revenue sources to reach the goal of putting $750 million into the Chicago Municipal Employees and Laborers pension funds over a 5-year period;
• Neither the governor nor the Illinois General Assembly (especially members of the House) can be blamed for enacting a Chicago property tax increase during an election year;
• It allows Quinn to campaign on his aversion to raising property taxes; and
• It doesn’t pit Governor Quinn and Mayor Emanuel against each other on the issue. It actually brings them closer together because Quinn’s November 4th opponent, Bruce Rauner, immediately attacked Quinn for signing the bill and said that if he had been in Quinn’s shoes, he would have vetoed the bill.
Beyond the governance issues related to Quinn signing the bill, just signing the bill may help Quinn from a political perspective. It allows Quinn to go on the attack even more on Rauner to reveal exactly what his solution would have been. But there may be more impact if it causes a louder roar from the media for Rauner to lay-out how he would have addressed this issue, the state pension reform bill currently being challenged in the courts and pension reform plans that impact other Chicago unions, Cook County employees and other municipalities throughout the state facing pension funding issues. This isn’t just a Chicago thing and Rauner’s answers on what he would have done will be analyzed by a lot of concerned union members and non-union members (aka voters) throughout the entire Land of Lincoln.