3 Min Read
CHICAGO (Reuters) - Chicago's plan to save two of its pension funds from insolvency passed the Illinois House on Thursday, but stalled in the Senate, which did not call the bill for a vote.
The measure, which passed 91-16 in the House, could be voted on in the Senate before a new legislature takes office in January.
"We remain interested in the legislation and we'll look for an opportunity to take it up in the near future," said John Patterson, a spokesman for Senate President John Cullerton, a Chicago Democrat.
The legislature ended its fall session on Thursday without making progress on a full-year budget or state-wide pension reforms.
The bill creates a new funding plan for Chicago's municipal and laborers retirement systems, which are projected to run out of money in the coming decade. The city enacted a water and sewer usage tax and a telephone surcharge to raise money to put the pension funds on a path to be 90 percent funded in 40 years.
The action brought Chicago stable outlooks on its credit ratings from S&P and Fitch Ratings.
Credit ratings for the nation's third-largest city have been deteriorating largely due to an unfunded pension liability that stood at $33.8 billion at the end of fiscal 2015 for Chicago's four retirement systems.
In the House debate on the bill, Republican Representative Jeanne Ives said Chicago taxpayers will be unable to afford the higher funding demanded under the plan and that passing the bill would allow the city to blame the state for future tax increases for pensions.
"I think it's a marginal solution to a very severe problem," she said.
Bill sponsor House Majority Leader Barbara Flynn Currie, a Democrat, said legislative approval was needed because the state ultimately controls public pension systems.
City officials have acknowledged that more money will be needed starting in 2023 when payments will reach actuarially required levels.
In March, the task of fixing the city's pensions became harder after the Illinois Supreme Court threw out a 2014 state law that reduced benefits and increased city and worker contributions to the municipal and laborers' funds.
Chicago has also taken action to boost funding for police and fire pensions through a phased-in $543 million property tax increase.
Reporting by Karen Pierog; Editing by Leslie Adler