Bill to increase some firefighters’ pensions advances

https://ift.tt/3nBCSXB

A mayoral spokesperson said the measure would "pass on a massive, unfunded mandate to the taxpayers of Chicago at a time when there are no extra funds to cover this new obligation."

The bill’s sponsor, Sen. Rob Martwick, D-Chicago, said during brief debate this afternoon that the legislation only codifies an existing wink-and-nod city practice. The current law is “one of the oddest quirks of pension law” and is “the most austere COLA offered in any pension system in the state of Illinois,” Martwick said. The proposal cleared the House in spring of 2019.

Currently, two firefighters that start on the same day and work for the same length of time could have “dramatically different COLAs” depending on their birth date. Those born after Jan. 1, 1966 get a 1.5 percent COLA adjustment with a cap of 30 percent (which they would hit in 20 years). Those born before that date receive a 3 percent annual cost of living increase with no cap.

Since 1982, Martwick says, “the Illinois General Assembly, with a wink-wink nod-nod agreement with the City of Chicago, has moved that (birth) date up, bit by bit by bit.” The last year the date was inched up was 2017.

“This bill makes the law reflect what the actual practice is, and I’d suggest if what we’re trying to do is achieve pension stability, that the first thing you ought to do is make finances transparent,” Martwick said. “This bill puts into the statute exactly the benefit that they will receive, and it requires the City of Chicago to calculate the benefit on this actuarial ramp they are on to get funding so they can actually get to 90 percent funding that they’ve promised to do.”

The Chicago firefighters pension “is a severely underfunded plan,” according to fund’s latest actuarial report. “The funded ratio is only 18.4 percent using market value of assets and the unfunded actuarial accrued liability is $5.1 billion as of December 31, 2019."

The majority of fund’s costs are paid for with property taxes, and the mayor’s office warns that enacting the legislation could lead to a tax hike. 

"If this irresponsible piece of legislation becomes law, Chicago taxpayers will be on the hook for $18 to $30 million per year, totaling over $850 million by 2055," according to a statement. "It is these very kinds of actions that further erode confidence in government."

The measure would cost the city over $850 million by 2055, according to a city spokesperson.

Lightfoot already faced significant pushback from aldermen over a relatively modest property tax hike in her most recent budget. She and Martwick have butted heads in the past. 

Brad Cole, the executive director of the Illinois Municipal League, said in a statement that this only makes the city’s unfunded pension liability debt worse. “This is better left to the normal agreement process, where all sides can negotiate and work out their respective positions in full transparency and dialogue.”

Laurence Msall, President of the Civic Federation, a fiscal watchdog group, said his organization will urge the governor to veto the legislation. “This is a total disconnect from the fiscal reality facing Chicago and its pension funds. To add benefits without any plan or connection to how the city’s expected to pay for them really is concerning. The total cost of over $850 million through 2055 to Chicago taxpayers is difficult to process, and why this would be an urgent priority of the lame duck legislative session escapes us."

via Crain’s Chicago Business

January 11, 2021 at 08:14PM

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s