Illinois Gov. Bruce Rauner vetoed Friday a bill that reduces Chicago's pension contributions to its police and fire retirement systems in the near term, nearly one year after the measure passed the General Assembly.
SB 777, which passed the General Assembly on May 31, 2015, reduced Chicago's required pension payments to the $2.4 billion Chicago Policemen's Annuity & Benefit Fund and the $1 billion Chicago Firemen's Annuity & Benefit Fund over five years, starting in 2016, and extended the deadline for the fire and police pension funds to reach 90% funding to 2055 from the current 2040 deadline.
Mr. Rauner wrote in his veto letter to legislators on Friday that the bill continues the “irresponsible practice of deferring” pension funding decisions and that reducing pension contributions in the near term sticks taxpayers with higher future pension contributions.
“By deferring responsible funding responsible funding decisions until 2021 and then extending the timeline for reaching responsible funding levels from 2040 to 2055, Chicago is borrowing against its taxpayers to the tune of $18.6 billion,” Mr. Rauner wrote. “This practice has to stop. If we continue, we’ve learned nothing from our past mistakes.”
Chicago, which faces more than $20 billion in unfunded liabilities across its four pension funds, had projected its required pension contributions would rise to increase to $1.1 billion total (collected in 2016) from $478.3 million the previous year, $550 million of which was attributable to the police and fire funds. Under SB 777, the police and fire share would be only $330 million this year.
“With a stroke of his pen, Bruce Rauner just told every Chicago taxpayer to take a hike,” said Chicago Mayor Rahm Emanuel in a statement Friday. “Bruce Rauner ran for office promising to shake up Springfield, but all he's doing is shaking down Chicago residents, forcing an unnecessary $300 million property tax increase on them and using them as pawns in his failed political agenda. And it is an unspeakable act of disrespect toward our men and women in uniform — and toward Chicago taxpayers — that the governor would veto a bill to protect taxpayers and police and fire pensions as we head into Memorial Day weekend. Decades from now, the Rauner Tax will be this governor's legacy in Chicago. His veto is harmful to taxpayers, and like everything he does, it is contradictory to his own supposed policy positions. It’s no wonder no one can trust him."