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Chicago Tribune
2 days ago
- Business
- Chicago Tribune
Civic leaders: The mayor and City Council should use these 10 principles to steer Chicago to fiscal stability
Chicago is staring down a $1.1 billion budget deficit next year, and to effectively address it, we will have use a variety of tools to position the city for both the short and long term. Beyond the deep structural issues of a transit system grappling with potentially devastating service cuts and grossly underfunded Chicago police and fire pension funds, the city is heading into this fall's budget season contending with pandemic relief funds drying up at the same time the federal government continues to slash funding, among other challenges. It is critical for the city and all of us who have a stake in the short- and long-term viability of Chicago to take a hard look at where we stand and stabilize revenues and expenses for the future. Chicago has a long history of looking to year-to-year 'solutions' to solve for its budgetary woes when what we really need is a long-term, fiscally responsible approach. In recent weeks, we have heard various proposals that could have a significant negative impact on the economic prosperity of the city and its ability to provide jobs. These proposals — the potential reinstitution of a per-employee head tax, for instance, or an 'excise tax' on payrolls for those making more than $200,000 a year — could harm our ability to keep and recruit employers at a time when we need economic growth to help dig ourselves out of this trench. Budgeting is hard. It requires tough choices and trade-offs and thoughtful debate across a spectrum of perspectives. Circumstances like these make it even harder. But instead of fighting over a shrinking resource pie, the city must grow that pie by promoting more business and population growth as well as improve the economic mobility of all Chicagoans. With such high stakes and so many factors to navigate, our organizations — the Civic Committee of the Commercial Club of Chicago, the Civic Federation and the Better Government Association — have developed a set of guiding principles to help policymakers cut through the complexity and make the best fiscal choices for Chicago and Chicagoans. An effective, responsible budget proposal should: By considering the budget options on the table through these lenses, we believe our city can steer away from its stubborn short-term thinking and dysfunctional remedies and move toward fiscal stability. Our organizations seek a thriving city that works for everyone, and we can best get there if our policies are anchored by intentional, disciplined choices that position us for success and stability now and for years to come. Implementing these principles won't clear the path forward of every bump, but hopefully it can help lead us in the right direction together.
Chicago Tribune
01-07-2025
- Business
- Chicago Tribune
George Cardenas: We don't need a grocery tax. We need a smarter City Hall.
Once again, Chicago finds itself debating yet another tax — this time on groceries, a primary component of our lives. Let's put the facts on the 'counter' for all to see. Putting a tax on food is probably the most regressive idea imaginable. A grocery tax disproportionately burdens working families, seniors and low-income residents. Many of our residents, specifically in minority neighborhoods, are already struggling with inflation, stagnant wages and rising property taxes. Gov. JB Pritzker was right to shelve the idea of a grocery tax at the state level. City Hall should follow suit. But more than rejecting this tax, we must confront a larger truth. City Hall doesn't have a revenue problem — it has a spending problem. And layering regressive taxes on overburdened taxpayers is not a solution — it's a signal that City Hall would rather pass the buck than tighten its own belt. During the COVID-19 pandemic, a historic influx of federal funds papered over our fiscal flaws. But those funds are drying up, and the structural problems they masked remain. Chicago's property tax levy has more than doubled in the past 10 years. According to the Cook County clerk, the property tax levy grew faster than the city's overall taxable value. From 2012 to 2023, the levy increased 102%, while taxable value increased only 53%. Annual property tax increases are not the only problem created by City Hall. What about the future bills now owed by taxpayers? In a recent Civic Federation report, City Hall debt now exceeds $29 billion. What does this mean? A squeeze on property owners, renters and small businesses alike for years to come. Alas, some bad news has yet to arrive in the neighborhoods. Skyrocketing property tax bills will start appearing. Some low-income residential areas, Englewood for example, will see hikes of over 100%. With some neighborhoods at less than an 80% property tax collection rate, the loss of homes and small businesses will continue. Meanwhile, new developments have slowed, commercial vacancies are high and property tax appeals are rising. On the one hand, we are pushing residents out by expecting them to pay more for less. And on the other hand, where is the 'open for business' sign much sought after by those who would like to invest? What is required is structural change. Simply, the costs of services must decrease, while the quality of the services must improve. Nowhere is the 'currently under maintenance' sign more visible than downtown. Once the city's economic engine, downtown is buckling under the weight of commercial vacancies and disinvestment. Tourists and office workers are avoiding downtown. Why? Businesses, especially in retail and hospitality, face higher security costs and reduced foot traffic. When businesses can't protect their merchandise, when families don't feel safe using public transit and when tourists start skipping Chicago for other cities, tax revenues dry up. It's simple math. We don't need another study. Recently, City Hall announced it had hired Ernst & Young to conduct an operational review — at a potential cost of over $3 million. But why pay a consultant to tell us what we already know? The data for the solutions is in City Hall's annual budget and audited annual financial statements. Places to find the solutions are already right there. There is simply no need for yet another study. For example, start with the ballooning of contractual services. Then, go to overtime abuse and outdated staffing mandates. Then turn to our pension funds. They continue to underperform, losing billions in potential returns because of high-fee, low-yield investment strategies. If Chicago is serious about restoring fiscal health without inflicting more pain on working families, it must embrace structural reform: The grocery tax debate is a microcosm of City Hall's deeper dysfunction: reflexively turning to taxpayers to fill budget gaps, instead of confronting inefficiencies. Chicago doesn't need another regressive tax. It needs a mindset that believes working families deserve a break, that believes in managing smarter and that is willing to do the hard work of reform. Let's start by putting the grocery tax idea where it belongs — on the shelf.
Chicago Tribune
12-06-2025
- Business
- Chicago Tribune
Pension change boon to Chicago police officers, firefighters, but additional hit to taxpayers
Last-minute changes approved by Illinois lawmakers in the waning days of the session will cost Chicago taxpayers tens of millions of dollars in their first year and billions over time by giving some police officers and firefighters more lucrative pensions. Lead sponsor Sen. Robert Martwick, a Chicago Democrat, told the Tribune the tweaks were a negotiated fix agreed to by Mayor Brandon Johnson and Gov. JB Pritzker that was promised to both bring parity between Chicago and downstate first responders and help bridge a shortfall in benefits for employees hired after 2010. Johnson's finance team estimated the initial cost would be $52 million in 2027. Budget watchdogs warned it will add billions to the city's pension liability, a figure that topped $37 billion by the end of 2023. 'It adds to the city's burdens at the worst possible moment, with no consideration of the city's actual capacity to meet those burdens,' said Joe Ferguson, the president of the Civic Federation. Chicago Chief Financial Officer Jill Jaworski's office is still 'conducting a comprehensive analysis' of the long-term cost of the legislation, her team said in an email, and would have updated figures in the coming weeks. 'Given the speed with which the amendment was introduced, any estimates at this stage would be preliminary and subject to change.' Downstate first responders received boosted benefits as part of the state's landmark consolidation of their pension investments in 2019. Chicago police officers and firefighters argued they deserved the same and were assured that lawmakers would make good later. Dave Sullivan, a lobbyist for the Fraternal Order of Police Lodge 7, wrote in the union's monthly newsletter that several years ago Pritzker called 'personally to assure me that he would make Tier 2 parity … a reality,' and he looked forward to the governor's signature. Pritzker's office didn't respond to a question about whether there was such an agreement and said the bill was under review. Martwick said Johnson 'understood a promise was made. I give him credit' for living up to it. 'He continues to show — unlike so many of his predecessors — a willingness to solve the problem and consistency in terms of living up to those steps' to do so. Mayor Lori Lightfoot more vocally opposed pension sweeteners during her term, including a last-ditch attempt to convince Pritzker to veto firefighter pension legislation that was projected to add between $18 million and $30 million to the city's annual bill. Johnson, however, supported a similar bill for police in 2023, adding an estimated $60 million to the city's immediate pension tab and $1 billion to the police fund's total liability. Jaworski did file an opposition slip to Martwick's amendment in the Senate, testifying the change would cost an estimated $52 million in its first year and characterizing the proposal as 'an unfunded mandate,' her office said. The Johnson administration has been aware of the police and fire effort since at least two years ago, when the General Assembly considered similar legislation and delayed it at the request of the city, the bill's sponsors said. Simmering behind the city change is the failure of both city and state officials to come up with a fix for a projected shortfall in Tier II retirement benefits. Despite concerns that benefits for public employees at some point won't be equal to what Social Security would provide — a violation of a federal 'safe harbor' law — the legislature did not pass a comprehensive Tier II overhaul this session. And Chicago officials who face the same problem haven't published the findings of a pension working group convened two years ago. Martwick, a member of the working group, said this legislation does help partially address their shortfall. Separately, the state budget passed this session includes a $75 million set-aside to help pay for the first year of expected adjustments for state Tier II employees. The Chicago pension legislation makes three key benefit boosts. First, it increases the final salary cap used to determine pension benefits for police and fire retirees from $127,283 to $141,408. It also changes the rate at which that salary cap for police officers and firefighters rises every year. The current rate is either half of the rate of inflation or 3%, whichever is lower. The bill switches that calculation to the full rate of inflation or 3%, whichever is lower. The third tweak changes the time frame to determine that final average salary figure. Right now, police officers' benefits are based on the average of the highest salary from eight of the last 10 years of their career. The bill allows for an alternate calculation based on four of the last five years, a boon for officers who received big raises at the very end of their careers. Officers would be paid the higher of the two. Firefighters already won that 'dual-method' calculation in 2023. Downstate police and fire pensioners won it as part of the consolidation effort. The change will definitely cost more, but how much will not be clear until the city or its pension funds perform an actuarial calculation. Ferguson said based on the federation's 'back of the envelope' math, the fix creates a rising annual cost that will top out at $750 million by the 2050s and add billions to the funds' long-term liabilities. 'It came late, mostly under cover of night, within the context of what was an utter whirlwind at the end of session,' Ferguson told the Tribune, noting the proposals were tucked in amid language to ensure children of deceased service members receive part of their parents' pension benefits. 'It's curious and it's troubling that something of this magnitude was able to fly by without there being more meaningful discussion of its near- and long-term impact,' Ferguson said, especially from Chicago legislators. Martwick filed the language as a gut-and-replace amendment in the last week of the spring legislative session. Lawmakers considered the legislation in a Senate committee a day later, and House lawmakers both discussed the matter in committee and passed the bill on the floor on the final day of the session. Moving massive bills in the final days of spring session is often the norm in Springfield, which also saw lawmakers publicly introduce and pass a $55 billion budget package within days of adjournment this year. 'It's important to underscore that the City was given very limited time to respond and was unable to conduct a fully validated, in-depth analysis before the hearing and the bill's passage — despite the fact that the legislation will have significant and lasting implications for the City,' a spokesperson for Jaworski said. Given the city knew the adjustment was a possibility years ago, Democratic Rep. Stephanie Kifowit said it was 'disingenuous' to suggest the bill came at the last minute. The Oswego lawmaker and bill sponsor pointed to video-gaming terminals as a potential funding source. State lawmakers repeatedly throughout the legislative session called for the city to use terminals to resolve its funding needs, but Chicago currently doesn't allow them. Critics fear terminals would cannibalize revenues at Bally's casino, which are already dedicated to public safety pensions. 'Their lack of movement on providing revenues for pensions is, to me, not compelling enough to disenfranchise the Chicago Police Department and the benefits that they rightly deserve,' Kifowit said of the city. State Sen. Li Arellano Jr., a Republican from Dixon and a former mayor of Dixon, was the lone 'no' vote when the bill went through the Senate Pensions Committee on May 28, a few days before the legislature adjourned. Given the low funding levels of Chicago's pensions, Arellano said he could not in good conscience 'say, yes, let's throw more debt onto Chicago taxpayers.' 'But since it was Chicago taxpayers footing this particular bill, there was a lot less resistance to it in the Senate,' he continued. No lawmaker, including Arellano, voted against the changes when they came up in the full Senate or full House. 'I think (what's challenging) for the Republican caucus is if none of the senators representing the city of Chicago itself had a problem with it, I think a lot in the Republican caucus said, 'Well, if this is what all of the voices representing Chicago want to do, who are we to disagree with them?''
Chicago Tribune
27-05-2025
- Business
- Chicago Tribune
Civic leaders: State lawmakers still have time to adopt a measured fix for Tier 2 pension problem
Illinois faces a defining fiscal challenge: a staggering $144 billion in unfunded liabilities across its five state pension systems. This immense burden strains state resources; crowds out critical investments in education, public safety and infrastructure; and undermines economic confidence. Meaningful pension reform isn't just desirable; it's essential for Illinois' future solvency and prosperity. And a 'fix' to one key pension issue — the need to address some evident shortcomings in the state's Tier 2 pensions — could yet happen before the legislature adjourns on May 31. The Civic Committee, Civic Federation and Better Government Association have consistently advocated for comprehensive solutions to address this major, intractable issue. Today, we urge the legislature to take a careful and fiscally responsible approach to a specific aspect of the system that demands attention: the growing concern that Tier 2 pensions will eventually fall short of federal 'safe harbor' rules that ensure public pension benefits are deemed equivalent to those paid to Social Security recipients. Tier 2 refers to the benefit structure offered to people who started working for the state on or after Jan. 1, 2011. The cost-saving new tier raised the retirement age, capped pensionable salaries, lengthened the number of years of salary used to calculate benefits and reduced post-retirement benefit increases. These changes significantly improved the trajectory of Illinois' pension systems, but they also put Tier 2 pensions at future risk of violating safe harbor rules. Gov. JB Pritzker's budget proposal currently under consideration in Springfield includes a plan to address this risk. Specifically, his plan calls for a $78 million set-aside to address potential Tier 2 compliance costs. This measured approach does what responsible fiscal management requires: It acknowledges the Tier 2 risk, sets aside funds and stops short of overcommitting before more is known. That is the right approach. Similarly, any permanent changes to Tier 2 should only proceed based on clear, actuarially sound analysis. A well-justified fix is appropriate and necessary but only when federal requirements are in jeopardy, and only to the extent required to meet those legal obligations. Once a pension benefit is promised in Illinois, the state constitution prevents it from ever being reduced or revoked. We strongly caution against any effort to turn this Tier 2 fix into an opportunity to add enhancements — so-called 'sweeteners' — that would deepen Illinois' already-substantial pension challenges. Lawmakers should resist that temptation. A responsible Tier 2 fix is one of 10 principles of pension reform our organizations published last fall to guide fair and sustainable pension policy. Illinois desperately needs progress on pensions; this measure is an essential building block for the larger solution ahead. What the state does not need, and cannot afford, is any form of pension 'reform' that makes matters worse. A Tier 2 fix should be no more than is needed, when it is needed, as determined by reliable, public-facing estimates of timing and cost. At present, the analysis showing exactly when a Tier 2 fix is required simply is not available. No state official, agency or consultant has put out a comprehensive estimate of how many employees or retirees might be affected and when. Such data is needed in order for policymakers, and the public, to understand both the scale of the problem and the timeline by which it must be addressed. Likewise, there is no complete estimate for some of the more ambitious proposals put forward by those arguing to 'undo Tier 2' by essentially replacing those pensions with the higher level of benefits that put Illinois' pension systems into such fiscal trouble in the first place. For example, cost estimates for a bill backed by a coalition of unions do not include cost projections for local plans, which would also be covered by the bill. Implementing pension changes without knowing the true cost is one of the original sins of past pension reforms — a grave mistake state lawmakers must not repeat this time. The magnitude of potential costs for making changes to Tier 2 benefits underscores the importance of being cautious. According to a report by the Commission on Government Forecasting and Accountability, implementing the bill would increase the state's pension liabilities by roughly $60 billion and would increase required contributions to the pensions by $30 billion through 2045. This is hardly the first time these data deficiencies have been brought to light: The Tribune Editorial Board made a similar argument in February, and other civic leaders have said as much, too. Now is the time for policymakers and the public to focus on gathering the essential data that can help draw the map toward responsible pension reform. Only then will we know if Pritzker's proposed $78 million set-aside is the appropriate target number, one that will address Tier 2's shortcomings and set the stage for tackling even greater pension challenges still ahead.
Yahoo
21-05-2025
- Politics
- Yahoo
Chaos unfolds in Illinois after local lawmaker arrested during council meeting for raising residents' concerns
Tensions flared at a Harvey, Illinois, city council meeting on May 12, as Mayor Christopher Clark ordered the room cleared just 20 minutes into the session. He cited disruptions from residents and supporters of Alderperson Colby Chapman. The confrontation underscored growing resident unrest over several issues they face with the southern Chicago suburb's administration. Thanks to Jeff Bezos, you can now become a landlord for as little as $100 — and no, you don't have to deal with tenants or fix freezers. Here's how I'm 49 years old and have nothing saved for retirement — what should I do? Don't panic. Here are 5 of the easiest ways you can catch up (and fast) Nervous about the stock market in 2025? Find out how you can access this $1B private real estate fund (with as little as $10) Chapman, representing Harvey's 2nd Ward, has become a central figure in the city's political turmoil. She was arrested during an April 28 council meeting — the second such incident — after attempting to raise concerns about a resident's property being sold. Video footage shows her being physically removed by police. Chapman contends she was merely advocating for a constituent. When asked why she didn't stay silent and just leave, she told FOX 32, "In that moment, I gathered my things, and that's exactly what I was looking to do. But when three male officers approached me as a female, as I'm trying to gather my things, I think that would startle any person, whether it be man or woman, because there's this abrasive approach to asking me to leave, and I simply was leaving. But the further point is, is all of that insinuated simply because I was being a voice for Ms. Allen?" Chapman's April arrest was for resisting arrest and disorderly conduct. Her mother was charged with the same. However, Chapman denies any physical altercation and explained, "I did not hit an officer (or) push an officer on my way out of the council. Nobody should have to ingest physical behavior simply for inquiry, and unfortunately, I digested that.' Residents at the May 12 meeting voiced frustrations over rising water bills, lack of city spending transparency and perceived public input suppression. Read more: You're probably already overpaying for this 1 'must-have' expense — and thanks to Trump's tariffs, your monthly bill could soar even higher. Here's how 2 minutes can protect your wallet right now One attendee said, "They don't want you to speak up with the injustice that's happening in the Black community. They're displacing us out of our communities. They're taking our homes." Chapman's next court appearance is scheduled for June 4. She and her supporters continue to call for a federal investigation into the city's practices, alleging systemic issues affecting the community's well-being. Aside from the issues the residents cited recently, they are also grappling with some of the highest property tax rates in Illinois and even the U.S. According to the Civic Federation, Harvey's estimated effective residential property tax rate was 4.74% in 2022, the highest among 11 selected suburban municipalities in Cook County. Another source shows Harvey's rate reaching nearly 7%, mainly due to declining property values along with stagnant or increasing levies. These burdens are compounded by a shrinking tax base. A report by the Illinois Policy Institute noted that from 2007 to 2016, Harvey's property tax rates nearly doubled as residents left the area, exacerbating the financial strain on those who remained. This financial pressure has led some households to make difficult choices in their budgets, such as delaying medical care or utility payments, to meet their tax obligations. Want an extra $1,300,000 when you retire? Dave Ramsey says this 7-step plan 'works every single time' to kill debt, get rich in America — and that 'anyone' can do it Rich, young Americans are ditching the stormy stock market — here are the alternative assets they're banking on instead Robert Kiyosaki warns of a 'Greater Depression' coming to the US — with millions of Americans going poor. But he says these 2 'easy-money' assets will bring in 'great wealth'. How to get in now Here are 5 'must have' items that Americans (almost) always overpay for — and very quickly regret. How many are hurting you? This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
