Rahm’s pension solution will alleviate statewide property tax pain

December 12, 2018

The Illinois Policy Institute also supports a constitutional amendment to the state’s pension clause.

CHICAGO (Dec. 12, 2018) – Chicago Mayor Rahm Emanuel called today for a constitutional amendment to fix public pensions. This timely proposal comes as local governments across the state are hiking property taxes to make up for the budgetary constraints of rising pension payments.

Emanuel’s plan included advocating for a constitutional amendment that would end an annual 3 percent compounding post-retirement raise.
The Illinois Policy Institute also supports a constitutional amendment to the state’s pension clause. It would allow municipalities to control the growth of pension benefits that have not yet been earned while protecting workers’ already-earned benefits

“Amending the constitution’s pension clause is absolutely necessary for cities and towns across the state,” said Adam Schuster, director of budget and tax research. “Without real reform, pension costs will continually crowd out core services such as police and fire protection, while forcing local governments to further hike some of the nation’s highest property taxes to close the gap. Illinois residents can’t afford this anymore.”

Background:
  • IPI research shows nearly 50 cents of every new property tax dollar during the past 20 years has gone to pay for pensions. That’s caused property taxes to rise 52 percent statewide.
  • The mayor’s announcement comes weeks before the deadline for local governments to certify their tax levies to their respective county clerks. State statute dictates taxing districts must complete this by the last Tuesday of December. The clerks then prepare property tax bills in 2019.
  • Solutions to fix pensions should also include increasing the retirement age, amending the constitution and enrolling all new state government workers into a new predictable, sustainable system going forward.

Local governments most pressed by pension costs include:

  • Carterville – Pensions costs drove the southern Illinois city to historically hike property taxes by more than 30 percent in November. Pension costs now consume nearly 70 percent of the city’s annual property tax levy.
  • Harvey – The city cut a combined 31 police and fire positions earlier this year to pay more into its pension funds.
  • Peoria – Pensions consume 85 percent of the city’s property tax revenue. In August, the city sent layoff notices to 27 municipal employees and cut another 38 police and firefighter positions in November to cover rising pension costs.
  • Norridge, Rockford, Springfield and Chicago all face looming pension crises.

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