Illinois Legislature OKs Chicago pension overhaul - DC News FOX 5 DC WTTG

Illinois Legislature OKs Chicago pension overhaul

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By JOHN O'CONNOR

AP Political Writer

SPRINGFIELD, Ill. (AP) -- State lawmakers on Tuesday approved Chicago Mayor Rahm Emanuel's overhaul proposal for two city pension programs that officials say could otherwise be out of money in little more than a decade.

The Senate voted 31-23 in favor of the Democratic mayor's initiative shortly after the House backed it 73-41. The measure, which hinges on a $750 million property-tax increase over five years, now goes to Gov. Pat Quinn, who has been noncommittal.

Resistance to the plan dissolved Monday night after House Speaker Michael Madigan, also a Chicago Democrat, removed language that mentioned the property-tax increase. Madigan's spokesman said his intent was to ensure that in the future, the earmarked revenue would not be diverted from paying down a $9.4 billion deficit over 40 years in the two funds, which cover 57,000 employees and retirees in the municipal workers and laborers' retirement accounts.

The original wording had made lawmakers skittish, fearing that a vote for a bill that even mentioned the tax hike would point fingers of blame at them. Excising that brought "aye" votes from 23 House Republicans, who noted the distasteful vote but said it was necessary.

Senate Republicans remained stubborn. They want to know why the city isn't presenting solutions to all five of its underfunded pension programs.

"What is the plan for coming up with the revenue to solve the totality of Chicago's pension problems rather than doing it on a piecemeal basis?" asked Sen. Matt Murphy, a Palatine Republican.

Emanuel says he negotiated the municipal and laborers deal with affected union representatives. Chicago has the worst-funded pension systems of any major U.S. city, and officials have yet to address $10 billion in unfunded liability for police and fire retirees and $7 billion for teacher pensions.

Gov. Pat Quinn did not promise he would sign the bill now that the tax language was gone, but said, "They got the message yesterday that that provision in the bill was not the way to go, and I'm glad they recognized that." The governor also suggested that the Chicago City Council could look for other ways of funding the plan, such as by closing corporate tax loopholes.

Quinn is making property tax relief a thrust of his budget plan in this election year.

Emanuel's plan requires not only more money from the city, but from employees. Workers who contributed 8.5 percent of their paychecks now would see that amount increase to 11.5 percent by 2019 and stay there until the system has 90 percent of what it needs to cover promised benefits.

And workers would receive less. The annual cost-of-living adjustments would fall from 3 percent a year, compounded, to a straight benefit of half the rate of inflation, or 3 percent, whichever is less.

The state constitution prohibits the reduction of promised benefits, a claim that is the cornerstone of lawsuits challenging the state pension overhaul the General Assembly and Quinn approved last fall. Madigan would not offer an opinion last week on whether he thought the Chicago plans are constitutional.

In answer to a question Tuesday, Madigan said, "Those who drafted the bill drafted the bill with the clear intent that it would be constitutional."

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The bill is SB1922.

Online: http://www.ilga.gov .

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Associated Press writers Kerry Lester in Springfield, Ill., and Sara Burnett in Chicago contributed to this report.

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Contact John O'Connor at https://twitter.com/apoconnor

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