Chicago’s pension payments to spike another $1B by 2023

October 23, 2019

Mayor Lori Lightfoot’s budget sets tone for first term

CHICAGO (Oct. 23, 2019) – As Chicago Mayor Lori Lightfoot addresses the city today, she faces more than just a one-year struggle to fix the city’s finances. Analysis from the nonpartisan Illinois Policy Institute reveals that by the end of her first term, the mayor will see pension payments $1 billion larger than they are today.

As much as one-third of Chicago’s $838 million budget deficit stems from increases in this year’s pension contributions. That annual pension payment is set to grow from $1.2 billion this year to $2.3 billion in 2023.

Ultimately, rising pension contributions mean Mayor Lightfoot could face looming budget deficits every year of her first term.

Quote from Adam Schuster, budget and tax research director for the nonpartisan Illinois Policy Institute:

“Big problems call for bold action. Fixing the pension crisis is essential to closing Chicago’s multi-year structural budget deficit. Without pension reform, city leaders, along with taxpayers, will be caught in a never-ending cycle of budget gaps and tax hikes that residents can’t afford.

“Mayor Lightfoot ran as a reform candidate willing to challenge business as usual. With a growing share of debt, limited pool of options and tapped-out tax base, her best option now is to become Illinois’ biggest advocate for pension reform.”

Background:

  • The mayor has discussed raising additional revenue through hiked taxes and fees, such as tripling ride sharing fees into or out of downtown Chicago, increasing taxes on certain commercial real estate sales, restaurants and a publicly owned casino.
  • Pension debt is the single biggest financial issue facing the city of Chicago and its taxpayers. With $46 billion in total pension debt, Chicago has more pension debt than 44 U.S. states.
  • Cumulatively, Chicago pension systems have a funding ratio of just 35%, a concerning ratio to finance experts.
  • Chicago taxpayers faced $864 million worth of annual tax hikes during former Mayor Rahm Emanuel’s administration. These slew of tax hikes failed to fix Chicago’s pensions.

To read more about Illinois Policy Institute’s recommendations for Mayor Lightfoot, visit illin.is/32GWdg4.

For bookings or interviews, contact media@illinoispolicy.org or (312) 607-4977.