CHICAGO, April 2 Chicago Mayor Rahm Emanuel's
plan to ease the city's pension funding shortfall popped up in
bill form on Wednesday in the Illinois Legislature and won
approval by a key House of Representatives committee.
House Speaker Michael Madigan, a Chicago Democrat,
introduced the bill, which passed the House Personnel and
Pensions Committee in a 6-4 vote.
However, Madigan amended the bill after the committee vote
and the measure was not taken up by the entire chamber on
Wednesday. A spokesman for Madigan was not immediately available
for comment on when a House vote would take place.
Meanwhile, the mayor's plan was running into opposition from
Republicans in the Democrat-controlled Senate.
"The bill needs bipartisan support," said Rikeesha Phelon, a
spokeswoman for Senate President John Cullerton, a Chicago
Democrat. "So it's a roll call question right now."
Emanuel's office on Tuesday released details of a proposal
aimed at two of the city's four retirement systems that would
raise property taxes and reduce retirement benefits for affected
Under the plan, the city would collect $250 million more in
property taxes over five years while workers' current 8.5
percent contributions to the city's municipal and laborers
retirement systems would rise 2.5 percentage points over five
years. Annual 3 percent compounded cost-of-living pension
increases would be replaced by raises tied to inflation and
would be skipped in some years.
In addition, the city would tap segregated money for
airports and utilities to cover pension funding increases for
workers in those departments.
Chicago warned that the two systems face insolvency within
nine to 17 years.
The city's police and firefighters pension systems are not
affected by the new plan. The state legislation previously
passed legislation for those two funds that kicks in next year
and forces Chicago to pay $600 million into the two funds.
In testimony before the House committee, Madigan said the
municipal pension fund was only 37.2 percent funded, while the
laborers' fund was 55.4 percent funded.
"Clearly, these are local pension systems that are in
distress," he said.
Public labor union officials testified against the bill,
calling it harsh for low-earning city workers, as well as
unconstitutional because it would diminish retirement benefits
that are protected by the Illinois Constitution.
Recently enacted pension changes for Illinois teachers and
state workers are being challenged in court on the grounds that
the state constitution prohibits any impairment of retirement
benefits for public sector workers.
Last month, Moody's Investors Service dropped Chicago's
credit rating one notch to Baa1, citing a massive and growing
pension liability that remains a threat to the city's fiscal
solvency. In July, Moody's slashed Chicago's rating by three
(Reporting By Karen Pierog; Editing by Steve Orlofsky)