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Pension fix responsibility to go back to Mayor Emanuel and Chicago City Council

Chicago Mayor Rahm Emanuel and Illinois Governor Pat Quinn
Chicago Mayor Rahm Emanuel and Illinois Governor Pat Quinn
Photo by Frank Polich/Getty Images

Yesterday, the Illinois General Assembly threw a “hot potato” back to Chicago Mayor Rahm Emanuel and the Chicago City Council when it passed Senate Bill 1922. By votes of 74-41-1 in the House and 31 – 23 – 2 in the Senate (For – Against – Present), the bill goes to Governor Pat Quinn for his signature making clear that if the City of Chicago needs to raise property taxes to fix the Laborers and Municipal Employees Unions’ pension systems, it will not be because the state made the mayor and the aldermen do it.

This bill was expected to pass last week. But, because of language in it that specifically referenced the State of Illinois legally requiring the City of Chicago to raise property taxes by $50 million a year for five years, it became untenable for the Illinois General Assembly to support. It passed a committee, but it became quickly apparent that it would not receive enough floor votes for passage. In addition to that, Governor Quinn made a pronouncement that he would veto it if it did pass, not wanting to push for a property tax increase as he prepares for a General Election fight against GOP candidate Bruce Rauner.

It put Emanuel in a bind that forced him to remove the “third rail” language. In essence, the version that passed yesterday gives Emanuel and the Chicago City Council the responsibility and authority to do whatever needs to be done to fix those two pension funds. Now it will be the mayor and Chicago’s 50 aldermen, who are all up for reelection in 2015, to either have a vote on their record of raising property taxes or finding some incredibly creative ways to find $250 million in user fees, fines, taxes or other means.

To a certain extent, this is only a ‘hot potato’ because the ‘ticking time bomb’ is the other three unions the City of Chicago will have to deal with – the police, firemen and teachers. The detonator is a $600 million payment the City of Chicago must pay next year to stabilize the fire and police pensions. If Emanuel can’t delay it, it could lead to a municipal budget nightmare, so expect to hear the phrase ‘like Detroit’ a lot.