CHICAGO – Faced with an employee pension crisis that could become his biggest challenge, Chicago Mayor Rahm Emanuel said Thursday he is putting his full force behind getting lawmakers in Springfield to achieve an overhaul of the state’s pension systems.
The mayor expressed frustration with legislative leaders and the gridlock in the state Capitol that has stalled negotiations over reforms. He said he expects lawmakers to take up the issue in January, after the November elections.
“They need to get in gear, pick up the game,” Emanuel said. “I’ve told the speaker [of the House], I’ve told the Senate president, I’ve told the minority leaders and the governor, I’ll spend as much or as little [political] capital as you think it takes.”
Emanuel stressed the pension issue in a meeting with reporters, a day after delivering a budget address in which he underscored how his city’s pension crisis stands to undermine many of the goals he has set out for his four years in office. The crisis could come to a head when a big portion of the city’s pension debt must be paid in 2015.
But it remains to be seen whether Emanuel can help move the ball toward a solution. Lawmakers have been trying and failing to solve the state’s own pension problems for years, and until that happens, nothing is likely to be done about Chicago’s separate pension woes. The General Assembly must approve any changes in public employee pensions on the state or local level.
If the General Assembly fails to act, Chicago’s payments to meet its obligations could reach $1.2 billion by 2015, the mayor’s office says. That’s equal to 22 percent of the city’s annual budget, or about the amount spent each year on salaries for the entire police department.
To cover that bill without cutting basic city services, taxpayers would have to pay 150 percent more in property taxes – an option Emanuel has called “unpalatable” and “absolutely unacceptable.”
Chicago’s pension problems are tied to the state’s in more than one way. Emanuel said the city is in a particularly perilous position in large part because its residents are the only ones in the state who are “double hit” on retirement costs for education. Chicago residents help pay education costs around the state, through income and sales taxes. They pay separately for Chicago teachers.
The mayor is adamant that any pension overhaul in Springfield address that inequity.
But that issue has been one of the biggest sticking points in getting a deal at the state Capitol, largely because Republicans fear that if each district is responsible for its own retirement fund, property taxes will increase.
On Thursday, in a roundtable organized by Bloomberg News, Emanuel again insisted on a package deal, saying any lawmaker who talks about reforming pensions but won’t fix the education issue “is just lip synching.”
The mayor in May laid out a plan that called for raising the retirement age for Chicago employees, requiring workers to contribute more to their retirement, and putting a hold on retirees’ annual cost-of-living increases for 10 years.
Last week, the Chicago City Council began holding hearings on the issue that Emanuel said are intended to educate aldermen and the public about the need for change. Emanuel also is sitting down with union leaders to discuss what’s in it for them: retirement security.
“I think the best thing I can do [for employees] is to give them certainty there will be a pension payment for them when they retire. And right now they’re paying into a system that can’t say that, and I think that’s grossly unfair to them,” Emanuel said. “And I think everybody needs to tell them the truth, which is what I’m starting.”
Senate President John Cullerton has said he expects lawmakers to take up the pension issue in January, when they return for the final, post-election weeks of the session.
Steve Brown, spokesman for Speaker of the House Michael Madigan, noted bills in January require a simple majority to pass, not the three-fifths majority that’s required in the November veto session. Also, reform advocates also could count on the votes of retiring lawmakers before they leave office.
But Brown noted that lawmakers so far haven’t been able to come up with any deal – with or without Emanuel.
“It’s impossible to characterize the impact [he could have] until we vote on a bill,” Brown said. “The sooner the better, as far as Mike Madigan is concerned. But I don’t know anyone who believes that necessarily will happen in January or November.”
Emanuel said he believes lawmakers will step up.
“The state has to deal with this. The city has to deal with this. And I have confidence that with members coming back, 20 to 25 percent of them because they are retiring ... that they will vote what’s right. And I’m going to push to get this done.”