Illinois Gov. Pat Quinn signed a pension reform bill Monday aimed at improving the funding of Chicago’s pension funds for laborers and municipal workers.
The law, which passed the Illinois Legislature in April, raises employee and employer contributions and reduces retiree cost-of-living adjustments for the $5.1 billion Chicago Municipal Employees’ Annuity & Benefit Fund and $1.4 billion Chicago Laborers’ Annuity & Benefit Fund.
A previous version of the bill removed a Chicago property tax increase component. In a letter to the General Assembly, Mr. Quinn wrote that although he supports the pension reform bill, he remains opposed to the proposed property tax increase.
“While I am committed to the public pension reforms embodied in Senate Bill 1922, I was dismayed by the ill-advised attempt to have the Illinois General Assembly impose a property tax increase on the people of Chicago as part of this legislation,” Mr. Quinn wrote. “As the mayor and members of the Chicago City Council work to identify savings to meet their obligations under Senate Bill 1922, I urge them to rule out a property tax increase on Chicago homeowners and businesses.”
Chicago Mayor Rahm Emanuel, who praised the law, said he will work with the City Council to find alternative sources of pension funding.
“This balanced plan relies on efficiencies and savings as part of a long-term funding solution, and I intend to work with City Council in the coming months to find alternative options to replace property taxes as the source of the city's first pension payment,” said Mr. Emanuel in a news release.
We Are One Chicago, a city union coalition, alleges that the law is unconstitutional and its member unions intend to file a lawsuit, according to an e-mailed statement.
“Mayor Rahm Emanuel's pension-slashing plan, now signed by the governor, is wrong for Chicago. This is no victory for the mayor, but a huge, missed opportunity to find a truly fair, constitutional solution,” wrote the coalition.
Under the law, the city's contribution to the two pension funds will increase by a fixed amount each year until 2020, when the city would have to put in the amount required by actuaries to have 90% funding for both plans.
The laborers plan is 58% funded, and the municipal plan is 38% funded.
Additionally, workers participating in the two plans will see their contributions rise 0.5% each of the next five years to 11% of pay from the current 8.5%.
