Illinois Policy Institute: Pension bill does not solve city pension crisis and likely means higher property taxes for Chicagoans

Today, Illinois Gov. Pat Quinn signed into law a pension bill for the city of Chicago. Illinois Policy Institute CEO John Tillman issued the following statement today regarding the signing of this bill:

“The Chicago pension bill signed today by Gov. Quinn does not solve the city’s pension crisis. Instead, it forces taxpayers and city workers to funnel billions more dollars into a pension system that will continue to teeter on insolvency. It is a bad deal for taxpayers and city workers alike.

“First, this pension law is bad for city workers. It forces them to contribute more to the city’s broken pension system, while accepting cuts to their cost-of-living adjustments. City workers do not receive greater retirement security in exchange. City workers who also are city residents will be doubly hit by the impending property tax increases that were the funding basis for this proposal. Worst of all, this law keeps the same people who bankrupted the pension system in charge of workers’ retirement savings. It’s time to get politicians out of the pension business; that’s the only way Chicago workers will ever see real retirement security.

“Second, Gov. Quinn was right when he said that property owners in Chicago and across the state are struggling. Illinois has the second-highest property taxes in the nation. But by signing this law, Quinn is giving the mayor and city aldermen the go-ahead to raise property taxes to keep delaying a head-on solution to the pension crisis. Homeowners in Chicago are struggling under the weight of high property taxes, and so are small business owners. Using a political maneuver to avoid being the one who ‘officially’ puts into effect higher property taxes is a failure in leadership for a governor.

“There was a better way to reform the city’s troubled pension system: by following the lead of reform-minded states and the private sector and getting politicians out of the pension business. In April, the Illinois Policy Institute released an alternative to Mayor Rahm Emanuel’s plan, which was vetted by an actuary and would:

• Immediately reduce the city’s pension debt by half
• Reform all the city’s pension systems, including police and fire
• Protect and pay all the pension benefits that workers and retirees have earned to date
• Completely eliminate Chicago’s pension debt by 2044
• Modernize the city’s retirement system by converting to a benefit that is controlled by workers – not politicians.
• Utilize a hybrid approach of a defined-contribution retirement savings and a Social Security-like benefit.

“Many would like to perpetuate the false narrative that there are only two paths to pension reform: cuts or tax increases, or both. There is a third way – a better way. The Illinois Policy Institute’s pension reform plan demonstrates this. The law signed by Gov. Quinn today is not a solution to Chicago’s pension crisis. The only hope for city workers and residents now is for aldermen to reject the property tax hike proposed to fund this terrible law and for residents to rally for real reform.”

For Interviews: Diana Rickert or Nathaniel Hamilton (312) 607-4977