A bill that reduces Chicago's pension contributions to its police and fire retirement systems in the near term passed the Illinois General Assembly.
SB 777 passed the Senate on a 38-20 vote Sunday, the final day of the legislative session, and a day after it passed the House.
SB 777 reduces Chicago's required pension payments to the $3.3 billion Chicago Policemen's Annuity & Benefit Fund and the $1.1 billion Chicago Firemen's Annuity & Benefit Fund over five years, starting in 2016, and extends the deadline for the fire and police pension funds to reach 90% funding to 2055 from the current 2040 deadline.
The bill also calls for proceeds from a proposed Chicago casino to go toward future city pension payments.
“I am pleased that this afternoon the Illinois Senate recognized that SB 777 provides a reasonable and responsible funding plan that will secure the pensions of our first responders while reducing the burden on our taxpayers,” said Chicago Mayor Rahm Emanuel in a statement.
A spokeswoman for Illinois Gov. Bruce Rauner declined to comment Monday on whether Mr. Rauner intends to sign the bill.
Chicago, which faces roughly $20 billion in unfunded liabilities across its four pension funds, has projected its required pension contributions will increase to $1.1 billion total (collected in 2016) from $478.3 million the previous year, $550 million of which is attributable to the police and fire funds. Under SB 777, the police and fire share would be only $330 million.
Hearings on lawsuits challenging the constitutionality of benefit cuts for participants in the other two city pension funds — the $5.1 billion Chicago Municipal Employees' Annuity & Benefit Fund and $1.4 billion Chicago Laborers' Annuity & Benefit Fund — will resume July 9 after they were put on hold pending an Illinois Supreme Court ruling on state pension benefit cuts.
The Illinois Supreme Court unanimously ruled May 8 that the state pension cuts were unconstitutional. The municipal and laborers' pension cuts took effect Jan. 1.
Moody's Investors Service downgraded Chicago's credit rating to junk last month following the Supreme Court ruling.
Bloomberg contributed to this story.
