By: Mark Glennon*
If you understand nothing else about Chicago’s budget, learn these few, basic numbers on its pensions and property taxes.
The chart below is from the city’s new proposed budget and reflects the historic property tax increase everybody is fretting about. It shows that 60.7% — about $786 million — of those taxes are budgeted to go to pensions in the coming year.
But remember that’s not nearly enough for the pensions. The city would have to be contributing $1.7 billion, not $786 million, to begin funding its four pensions properly, and even that’s using the phony official assumptions and accounting public pensions regularly use. (That $1.7 billion is the Actuarially Required Contribution, as compiled from pension actuary reports on page 74 of The Civic Federation’s new report released today on the city budget.)
Now, if the city raised property taxes to cover that actuarially required $1.7 billion, its total property tax levy would go from from about $836 million for the 2015 fiscal year, to $1.26 billion projected for next year that assumes the historic tax increase gets passed, and then to $2.2 billion to cover the total ARC payments. This would be the result:
In conclusion, Chicago’s property tax would have to go up by 2.6X from last year’s levy just to cover the city’s four pensions, and 77% of the resulting total would have to go to those pensions. Again, that’s assuming the actuarial assumptions are fair. They’re not. It does not address other elements in the city’s deficit, the school district and other overlapping municipalities.
Got a problem with any of that?
*Mark Glennon is founder of WirePoints. Opinions expressed are his own.