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SPRINGFIELD, Illinois May 30 (Reuters) - A bill to give Chicago some financial breathing room by restructuring its contributions to retirement funds for city public safety workers headed to a final vote in the Illinois Legislature after passing the full House and a Senate committee on Saturday.
The full Senate is expected to take up the measure on Sunday, the final day of the legislature’s spring session.
Under a 2010 state law, the city’s contribution to its police and fire fighter funds next year increases by $550 million to about $839 million. The bill would reduce that amount by about $220 million, to $619 million. Chicago’s payments would increase every year between 2017 and 2020, but not as much as under the 2010 law.
After 2020, the city’s contributions would be calculated at amounts that would enable the two pension systems to become 90 percent funded by 2055, which is 15 years longer than in the 2010 law.
The bill passed the Democrat-controlled House in a 65-45 vote and then the Senate Executive Committee by 11-6.
House Republicans chastised the bill for letting Chicago off the hook for the larger payments the city has been aware of for years and for promising benefits to its workers it could not afford.
House Majority Leader Barbara Flynn Currie, a Chicago Democrat, said the bill, pushed by Chicago Mayor Rahm Emanuel, was aimed at smoothing out the city’s pension contributions and avoiding a big property tax increase on city residents.
“The mandatory payments will help the city’s credit ratings,” she added.
The bill allows for an intercept of state funds due Chicago and for the retirement funds to go to court if the city fails to make required contributions.
A recent drop in Chicago’s credit rating from Moody’s Investors Service to junk level, due largely to the city’s growing pension funding problems, triggered $2.2 billion in accelerated bond payments and fees to banks.
The city is in the process of converting a chunk of its variable-rate debt to fixed rate to end bank letters of credit and interest rate swaps that were triggered by the downgrade.
The bill also requires any proceeds from a Chicago casino in the future to be allocated to the public safety retirement funds. Emanuel has been asking state lawmakers for a bill authorizing a city-owned casino, but legislation has so far not moved. (Reporting by Karl Plume Additional reporting by Karen Pierog in Chicago; Editing by James Dalgleish)