Chicago's effort to stabilize two of its pension funds won approval in the Illinois House of Representatives.
The measure aimed at restoring retirement funds for laborers and municipal workers passed Tuesday by a vote of 73-41 and moved to the Senate. The bill was changed from last week's initial proposal after Gov. Pat Quinn said he opposed letting lawmakers raise Chicago property taxes by $750 million over the next five years. In a compromise, the City Council would have to endorse the increase.
“To do nothing will put all the participants in the system and retirees at risk of no benefits,” said state Rep. Elaine Nekritz, who said that, without action, those two systems will be bankrupt within 15 years. Ms. Nekritz is chairwoman of the House Personnel and Pensions Committee.
The bill, if enacted, represents only a partial solution to growing unfunded liabilities in Chicago, which totaled almost $20 billion in 2012. The measure does not affect police, firefighters or Chicago Public School teachers, nor does it address the additional $600 million in pension payments due next year.
Workers participating in the $5.1 billion Chicago Municipal Employees' Annuity & Benefit Fund and the $1.4 billion Chicago Laborers' Annuity & Benefit Fund would see their contributions rise half a percentage point each of the next five years to 11% of pay from the current 8.5% and retiree cost-of-living adjustments would be reduced.
The municipal and laborers plans are 38% and 58% funded, respectively.
