BY HAL DARDICK
Gov. Bruce Rauner on Friday vetoed legislation that would have given Chicago more time to restore financial soundness to its police and fire pension funds, a move that could force Mayor Rahm Emanuel to raise taxes yet again.
Over the short term, the bill would have reduced how much taxpayers contribute to the retirement funds by hundreds of millions of dollars a year. But that delay would come at a cost of billions of dollars over the long haul. By paying less upfront, the city would see its pension debt continue to grow.
And that’s why Rauner vetoed it.
“This bill continues the irresponsible practice of deferring well into the future funding decisions necessary to ensure pension fund solvency,” Rauner wrote in his veto message to lawmakers. “The cost to Chicago taxpayers of kicking this can down the road is truly staggering.”
Emanuel was ready for the veto, quickly releasing a blistering statement that ripped his onetime vacation pal for “an unspeakable act of disrespect toward our men and women in uniform.”
“With a stroke of his pen, Bruce Rauner just told every Chicago taxpayer to take a hike. Bruce Rauner ran for office promising to shake up Springfield, but all he’s doing is shaking down Chicago residents, forcing an unnecessary $300 million property tax increase on them and using them as pawns in his failed political agenda,” Emanuel’s statement read. “Decades from now, the Rauner Tax will be this governor’s legacy in Chicago. His veto is harmful to taxpayers, and like everything he does, it is contradictory to his own supposed policy positions. It’s no wonder no one can trust him.”
Rhetoric aside, Rauner’s move now leaves Emanuel with some work to do. If he can’t get legislators to override the veto, he’ll have to come up with an additional $220 million before year’s end and nearly $1 billion over the next four years. That would require the city to “identify a new revenue source” — meaning higher taxes, fines or fees — according to a handout that city financial officials recently gave to aldermen.
Aldermen could have a tough time summoning the will to hit up taxpayers again after approving $755 million in new fines, fees and taxes last year. That included a $543 million property tax increase, the biggest in modern city history, to cover future contributions to the police and fire pension funds.
It could be equally tough for Emanuel to secure the three-fifths vote in each chamber of the General Assembly needed to override the governor’s veto.
The bill passed in the Senate a year ago with a veto-proof majority, but it was six votes short of the 71 needed to override in the House. Four House Democrats who are potential Republican targets this fall voted against the bill, and another four House Democrats were absent that day. In addition, one of the two House Republicans who voted in favor is no longer in the legislature.
The mayor can make the case that an override would spare taxpayers some immediate pain, even if stretching out the payments as proposed in the legislation would result in much higher overall taxpayer contributions to the two underfunded retirement accounts.
Both chambers approved the legislation a year ago, but Senate President John Cullerton, D-Chicago, waited until late March to send the legislation to Rauner for fear that he would veto it amid a partisan stalemate over the state budget — which is what happened.
The timing — just short of Tuesday’s end of the spring session — gives the city a chance to seek a last-minute override. If that fails, it can start figuring out how to cover the additional cost.
Under the legislation, the city would have until 2055 to bring the assets of the pension funds to 90 percent of what’s needed to cover benefits. The police and fire retirement funds are short about $11.6 billion of what’s needed to cover future payouts. Without the bill, the city had until 2040, which would jack up annual costs over the short run and come on top of a host of other near-term financial problems.
Emanuel already is considering asking the City Council to authorize an additional $175 million property tax increase for Chicago Public Schools to cover its teacher pension payments. He’s also looking for ways to restore health to the city largest pension system for municipal workers that could easily increase taxpayer costs by upward of $500 million a year.