By: Mark Glennon*

 

If you’re scratching your head about why public unions are thrilled with the override of Governor Rauner’s veto of SB777, which reduces taxpayer contributions in the near term for Chicago’s police and fire pensions, here’s why:

 

Overlooked by our ace press corps is the funding guaranty in the bill. Starting in 2020, taxpayer contributions increase to whatever-it-takes, sky’s-the-limit, annual contributions sufficient to fund the pensions, and property taxes automatically increase to cover those amounts. The bill also mandates that revenue from any casino in Chicago go towards pensions.

 

So, public unions are thinking that the additional cost resulting from delayed contributions is less important than statutory assurance that property taxes will increase as necessary. Rauner estimates the additional cost at over $18 billion. Reporters haven’t bothered to ask anybody for the actuarial analyses on this, so it’s hard to confirm that number.

 

Ironically, there’s a bit of of a consensus coming together here, which is why the override was sustained. For pension reformers, there’s certainly a plausible rationale for kicking the can — just don’t fund the damn things. They won’t get paid anyway, the thinking goes, and taxpayers eventually will demand elimination of the funding guaranty and real pension reform (or, more likely, the city will go into Chapter 9). So, why sacrifice other services and waste taxpayer money now on the bottomless pension pit?  If labor thinks their funding guaranty will hold up and that Chicago’s population will stick around to honor that guaranty, well, let them think that.

 

*Mark Glennon is founder of WirePoints. Opinions expressed are his own.

 

 

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bob
I don’t see where it makes tax increases automatic-text of page says “Beginning in tax levy year 2020, the city council shall levy a tax annually at a rate on the dollar of….” Sounds like it forces your alderman to be the ***hole to their constituents, which is exactly what I told them when I called yesterday. Tell him it has to be done, but don’t mandate the specific way it gets accomplished. I think a lot of aldermen are going to be really unhappy when the reality of this hits home. They will be forced to shoulder all the blame for something they have no say… Read more »
Mike
The short title of SB 777 is “PEN CD-SURS-ADMINISTRATIVE.” But the bill as passed into law is for Chicago Police and Fire pension funds, not the State University Retirement Systems (SURS) pension fund. Has a legislator ever introduced a bill, and is there a bill in the current General Assembly, to prevent legislators from changing the contents of a bill so the contents of the bill is no longer reflected in the short tile? The practice makes scanning short titles fruitless, because the short titles are often are not an indicator of the contents of passed legislation. For example, all pension bills. And this is important because… Read more »
Mike
The unions, pensioners, and pension contributors want a funding guaranty added to state law for all pension systems akin to IMRF, since the pension sentence in the state constitution doesn’t include a funding guaranty. So with Public Act 99-0506 (PA 99-506) there is now a funding guaranty for IMRF, Chicago Police, and Chicago Fire. Which remaining pension system is next? Various people have been saying for 45 years if the unions and those in the pension system want to imperil their pensions with dumb legislation, let them. Look where we are now. The game plan is obvious. Casinos for pension funding and jobs, and a wide variety… Read more »
Rick

Why didn’t rauner even mention this? Public employees are no longer in public service. They are at odds with the taxpayers. For that matter they are not even good employees. A good employee creates value that can contribute to the bottom line in cost savings, competitive advantage, or profit. Public employees contribute less and less want more and more, and to boot are in position to write law to their advantage. Even constitutionally. Ultimately “getting out of Dodge” will be the last hope of retiring or strapped taxpayers in Illinois. Ft Myers Florida, Galveston Texas, the carolinas, Arizona, anyplace you can name will treat your labor better.

bob

That’s why I think Rauner is such a numb nuts. He would have scored a MAJOR amount of points with city taxpayers if he would have pointed out this hidden time bomb with automatic, unlimited property tax increases. On a scale of 1-5 for political street smarts I’d give him a 0. Talk about a wasted opportunity.

Bross

This legislation gives the union everything they want. What happens when property taxes double, triple? Homeowners property values plummet? Rents skyrocket? These people are complete idiots and are just union members dressed up as politicians representing taxpayers when in fact they are only there to rape and pillage taxpayers.

nixit71

Gotta love the irony of using gambling revenue wagered primarily by retirees to fund policemen’s pensions while the casino hires retired 55 year-old Chicago policemen as security guards.

Joe Mathewson

Excellent insight! Where is the press?

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