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.