CHICAGO, June 25 Chicago would raise a monthly
emergency service surcharge on phone lines to free up $50
million in operating funds to increase its payments to two city
pension funds under a proposed ordinance introduced on
Mayor Rahm Emanuel and 36 city council members backed the
ordinance, which would increase the current surcharge,
generating an additional estimated $12 million this year and $40
million next year. The measure would allow Chicago to avoid a
hike in property taxes, which are largely used to fund the
city's four retirement systems.
"This revenue will support (the Office of Emergency
Management and Communications) and fund a vital emergency
service for residents, while allowing the corporate fund to end
its subsidy of the 911 center and instead make the additional
$50 million payment required for the first year under the reform
plan for the Municipal Employees and Laborers pension funds," a
statement from the mayor's office said.
The Illinois Legislature earlier this year approved the
higher surcharge, as well as reforms requiring the city and
workers to increase pension contributions to the two retirement
funds. The law, which also ties cost-of-living adjustments for
pensions to inflation while skipping the adjustments in certain
years, lets Chicago decide how to raise money for the increased
Emanuel's office has warned that the municipal and laborers'
systems face insolvency within nine to 17 years unless changes
are made. The funding shortfall is $8.4 billion for the
municipal system and $1 billion for the laborers system,
according to city documents.
Severe pension funding problems has led Moody's Investors
Service to cut Chicago's credit rating four notches to Baa1
since July 2013.
(Reporting by Karen Pierog; Editing by Eric Walsh)