In perhaps what was a surprise to no one but himself, Illinois Democratic Gov. Quinn’s signature of a pension bill for the city of Chicago, on Monday gave both his campaign and Chicagoans two things: no increase in property taxes, and a boost to his gubernatorial campaign by using an increase in the telephone tax, that he called, “another tool in our tool box that gives us additional ways to address our obligation.”
As the Times noted, “It authorized the City Council to raise — from $2.50 to $3.90 — the monthly surcharge tacked on to cell phone and wireline phone bills and increase the fee imposed on prepaid cell phones from 7 to 9 percent of the transaction amount.”
And, most importantly, “Last year, the city collected $90 million from the surcharge on all three types of phones. At that rate, a 56 percent increase would generate an additional $50.4 million—just enough to let gun-shy aldermen off the hook for the first year of the property tax increase.”
While Chicago’s mayor, Rahm Emanuel, according to the Chicago Sun-Times, “was non-committal about the governor’s demand that Chicago rule out property tax increases beyond the first year,” the likelihood of a property tax increase is not entirely off the table, according to some observers, who see Emanuel’s view of addressing the eventuality of a tax increase, if not this year, then next.
If Emanuel had his way more than $250 million would have been added to the city coffers to cover the pensions of laborers and municipal workers, to the tune of $750 million, no small change to address a huge deficit hole in a city that has been trying to rid itself of red ink, by chasing down every dime that it can in revenue enhancement.
Pension obligations are “250 percent from $467 million in 2014 to $1.2 billion in 2015 as a result of recent statutory requirements to ramp up pension payments and improve the funding status of the city’s pensions,” according to the Laura and John Arnold Foundation, a Texas based reform foundation.
The irony, of course, is that Quinn initially wanted to address state deficits with a tax increase that had no support from the legislature.
Emanuel, by turn gave the standard response of his willingness to “work with the City Council” to find alternatives for the first payment. Note after the first payment, which means he can, and probably will, do anything, on the surface of agreement to get his way.
Politics as usual.
But, that also leaves three other pension funds: police fire and teachers, no small potatoes there.
What has become an issue of local politics that some say should have remained local now has Quinn arguably in the winner’s seat, for now.
His Republican opponent, venture capitalist, Bruce Rauner, who has given no more than a record of vetoes on pensions, other than a winner-take-all approach with all public employees going into a 401(k) plan, leaves us wondering if the who, or what of genuine pension reform takes a back seat to what is promising to be a battle royal between Rauner and Quinn.
Meanwhile retirees have faced the fact that they will get a “simple, 3 percent increase or 50 percent of the consumer price index, whichever is less based on their first retirement check.”
The bill that was signed also will give no increase in retirement benefits in 2017, 2019 and 2025. Plus employees “will be required to wait two years after retirement before becoming eligible for cost-of-living increases. That’s twice as long as they are required to wait today. Retirees whose annual pension checks total $22,000 or less would be guaranteed at least one percent more each year,” noted the Times in their assessment.
With union leaders given the green light to sue the city, and “the state to withhold funding from Chicago if the city fails to make its required pension payments,” it gives pause to the real benefits of this bill.
In our opinion, it seems as if this is one bill that we have to hold our noses, and give assent.
With Emanuel’s popularity sinking faster than the proverbial gangster in the Chicago River, his public statements seem limited to “be nice” comments, and are nowhere near enough to reassure Chicagoans, especially in light of the 50 school closings last year, that he has their best interest at heart.