Editorial: Gov. Pritzker needs to veto this pension bill. Chicago can't afford it.

Chicago Tribune

4 days ago

Memo to Springfield: Chicago is broke.
Gov. JB Pritzker has a bill on his desk that would sweeten pension benefits for Chicago's police and firefighters hired in 2011 or later, to the tune of $60 million more out of the city budget in 2027 alone and more than $11 billion over the next three decades, according to the city's own projections.
The measure passed unanimously in both chambers at the end of the spring session, allowing for next to no debate and, astoundingly, was supported by every Chicago House member and senator. At the time of the bill's passage, we wrote that the entire Chicago delegation had effectively had voted to increase property taxes on their constituents. Property taxes, of course, are the main means municipalities have of financing their pension obligations to their workers.
Interestingly, the governor acknowledged the conundrum last week. Asked about the bill, he said, 'One thing to consider, of course, is the finances of the city of Chicago. How will they pay for it?' The other important consideration, he said, was ensuring Chicago's first responders are 'well taken care of.'
We're glad to see Pritzker explicitly state why he's mulling whether to veto despite the strange prospect of rejecting legislation that passed without a single dissenting vote. By asking rhetorically if Chicago can 'pay for it,' the governor has answered his own question.
Of course Chicago can't pay for it. The police and fire pension funds have a mere 25% of the assets needed to meet their current and future obligations as it stands. Since we wrote about this measure in June, the city has estimated what it would do for its woefully underfunded first-responder funds. That percentage would drop to an almost unfathomably low 18%.
To those who say it's nonsensical to veto a bill with such overwhelming support, remember that GOP lawmakers mainly went along because of the Chicago delegation's unanimous backing and the fact that only Chicagoans' taxes would be affected. All the Chicago Democrats who voted yes could justify reversing their positions by saying (truthfully) they didn't have the city's projections on just how much these changes would cost taxpayers.
Chicago taxpayers already are chewing their nails wondering how the city will plug a 2026 budget deficit exceeding $1 billion. The following year looks even worse.
Pritzker already tossed an $80 million hot potato in Chicago's lap with his 2023 initiative to phase out the state's 1% tax on groceries, the proceeds of which had been distributed to municipalities. More than 200 municipalities have approved their own 1% grocery taxes, as the state allows them to do. Mayor Brandon Johnson wants the City Council to do the same for Chicago, which must happen by a state-set deadline of Oct. 1.
There are no guarantees, given Johnson's fraught relationship with the council and Chicagoan's understandable resistance to tax hikes of any sort, that aldermen will do as he wishes.
Meanwhile, this pension time bomb would cost the city nearly as much as repeal of the grocery tax and in the future will cost far more.
Speaking of the mayor, while he has spoken tepidly against this bill, he ought to be forcefully urging Pritzker to veto it and Chicago lawmakers to vote to sustain that veto, despite their earlier support of the measure. The city essentially has been missing in action on this issue, and Johnson apparently is struggling to balance his political brand as an ardent union backer with his duty to Chicago taxpayers. This is no time for such timidity.
At this stage, it's worth laying out the origins of this bill. In 2010, in a bid to reform Illinois' public-sector pensions, the state created a second tier of beneficiaries hired in 2011 and thereafter — so-called Tier 2 workers — whose retirement payouts were to be substantially less than the overly generous benefits of existing employees and retirees that had gotten Illinois so deeply in pension debt.
Six years ago, Pritzker signed into law sweetened pension benefits for Tier 2 cops and firefighters in Illinois outside of Chicago as part of a consolidation of downstate police and fire pension funds. Ever since, Chicago police and fire unions have argued their Tier 2 workers ought to get the same treatment.
In addition, proponents cite concerns that the benefits for Tier 2 workers don't rise to the level of Social Security benefits, which would violate federal law.
This page has been consistent on the issue of Tier 2 pension benefits and Social Security. State policymakers should do no more than ensure they are compliant with the law and rebuff union efforts to use the Social Security argument in effect to do away with Tier 2 and pension reform altogether.
As much as we appreciate and rely on Chicago's first responders, everyone who went to work for the Police or Fire departments after 2010 knew — or should have known — what their retirement benefits were. In a perfect world, their pensions would be equivalent to those earned by their counterparts outside the city.
We don't live in that world. Far from it.
Mayor Johnson, you should advocate for your city's beleaguered taxpayers and call on Gov. Pritzker and Chicago's Springfield delegation to do the right thing. And, Governor, adding to Chicago's fiscal crisis hurts the whole state. Whether the mayor asks or not, veto the bill.