Six months ago, plugged-in Chicago politico Forrest Claypool sounded the alarm about rising pensions debts and called for dramatic action to bring them under control.
A longtime Democratic Party stalwart, Claypool charged that “Chicago and Illinois are sinking in a quicksand of pension debt.”
Legislators responded to the issue last week, as it related to the city of Chicago, but not in a way Claypool would support. In last-minute action before adjournment, they decided what Chicagoans need is more pension quicksand, not less, in which to sink.
The Chicago Tribune reported the bad news that proposed increases in firefighter and police benefits will “cost Chicago taxpayers tens of millions of dollars in their first year and billions over time.”
By the way, the city’s public pensions already are underfunded by more than $35 billion, and the additional costs represent money the city does not have, not that Chicago Mayor Brandon Johnson cares. He was in on the dubious deal from the get-go.
The sponsor of the deal — Chicago state Sen. Robert Martwick — said Gov. J.B. Pritzker also was part of what can only be termed the cabal. His office isn’t taking public credit yet, but the public will know whether Pritzker was in or out if and when he signs the measure into law.
He would be well-advised to issue a veto.
As ill-conceived as the Chicago measure is, circumstances could have been worse.
Organized labor is pushing a substantial increase in Tier 2 pension benefits that cover public employees — teachers, state employees, university employees, judges and legislators — hired on or after Jan. 1, 2011.
The Jan. 1, 2011, demarcation was put in place years ago when state legislators tried to address the state’s skyrocketing public-pension costs by modifying future increases for existing employees and reducing pension costs for future employees.
The Illinois Supreme Court struck down as unconstitutional the effort to modify future increases for current employees. At the same time, public unions have been trying to make Tier 2 benefits near-equal to Tier 1 benefits.
The estimated cost of the proposed Tier 2 increase is in the neighborhood of $30 billion, and Pritzker and many legislators want nothing to do with it.
Tier 2 pensions have raised concerns that they are not the equal of what Social Security would pay. That has not been confirmed. Neither has it been confirmed what it would cost taxpayers to make them equal to Social Security.
Legislators, at Pritzker’s request, approved a special Tier 2 reserve fund of $75 million to use, if necessary, to supplement any payments that fall short of what Social Security would pay.
As of December, Illinois’ public-pension funds were about $145 billion underfunded.
Representatives of organized labor, a huge influence on the state’s ruling Democrats, have grown increasingly vexed over the governor’s and legislature’s failure to embrace its proposed Tier 2 pension boost.
“This issue isn’t going away,” the We Are One coalition stated in the aftermath of the legislative session.
The governor’s office, however, responded with a statement that was equally contentious. A media spokesman said the governor will not make “major financial decisions” without painstaking review to determine costs.
Given Illinois’ parlous financial health, it would appear unlikely Pritzker & Co. will acquiesce on a Tier 2 boost. However, one would have thought Chicago’s municipal leadership would have taken the same stance with regard to its pension spending.
