CHICAGO — Before exiting his job as Chicago mayor, Emanuel is leaving behind a blueprint to fix public pensions.
The city is facing $1 billion in new annual payments in five years, with the first increase in contributions due next year.
“Simply put, leaders in the past made commitments without the resources to back them up,” Emanuel said at Wednesday’s city council meeting. “And now, inevitably, the bill has come due.”
The mayor’s solutions include depositing tax money from recreational marijuana into the pension accounts, if lawmakers legalize it, and using revenue generated by a future casino to shore up the pensions.
Those proposals already have some support, but his other ideas are more controversial.
The mayor wants to amend the Illinois constitution to eliminate the pension protection clause. His concern is the annual cost-of-living adjustment for retirees — it is essentially a pay raise at a time when current government workers are being squeezed.
“I buy into the view that a 3 percent compounded COLA for a retiree when inflation is zero, and workers are taking furloughs, there is nothing progressive about that,” he said.
So is there political will for changing the constitution? Governor-elect J.B. Pritzker said, “I just don’t see the likelihood of anybody getting a constitutional amendment passed to change that provision in our constitution.”
House Republican Leader Jim Durkin said he’s keeping an open mind.
"I’m glad that we actually have a Democrat who’s talking about changing the constitution to save our pensions systems," he said.
The mayor also wants aldermen to study borrowing $10 billion in pension obligation bonds.
"By issuing these bonds, we would immediately improve the health of each of the four pension funds," Emanuel said.
Lawrence Msall of the Civic Federation said borrowing is a huge risk.
"If this investment should occur at a time when the market turns against the pension funds, what happens then? We’ll be stuck with that liability," he said.
Various stakeholders will have to buy into Emanuel’s plan and there’s no sign that will happen. In May, it will be a new mayor’s problem.