After a long and contentious year of attempts to fix Chicago's expensive and ailing pension system, leaders have been warned that continuing to not do anything may cost the city an extra $1.5 billion per year in just a few years' time.
The Chicago Tribune reports that city aldermen received the tough news as part of a lengthy meeting with Mayor Rahm Emanuel and the mayors of many other Illinois cities and towns - a gathering designed to pressure Governor Pat Quinn to take action on substantial state-wide public pension reform.
Chicago's municipal leaders fear that the realities of dealing with those extra costs, expected to make a massive leap by 2016, will require massive cuts in services and a potential tripling of existing city property taxes to help cover the pension fund needs.
"I need Springfield, and not me, but the entire city of Chicago needs Springfield to be a partner in finding a resolution to our retirement security issue," Emanuel said Monday, speaking about the state capital. "They've agreed that they're going to deal with this in January."
Cities across Illinois are scrambling to deal with a state mandate in 2015 requiring them to adjust payments so that public safety pension funds are 90 percent funded within three decades.
In Chicago, bringing the city's police and fire pensions up to that level will cost almost $580 million, and the increases to city employee pensions would add up to $614 million by 2016.
"We're talking about the real Armageddon the city faces if we don't get out of it," Chicago Alderman Richard Mell told the Tribune. "We have to solve this situation as quick as we possibly can. You have to go down and beat (State Senate President John) Cullterton, (House Speaker Michael) Madigan and Quinn up, because that's where the fault really lies."
Illinois' governor has considered state-wide pension reforms including higher employee contributions, delayed retirement, lower cost-of-living increases and the adoption of a 401(k)-styled plan.
Complete your profile to continue reading and get FREE access to BenefitsPRO, part of your ALM digital membership.
Your access to unlimited BenefitsPRO content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Breaking benefits news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical converage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
