Updated 10:25 a.m. on Dec. 13, 2018
Outgoing Chicago Mayor Rahm Emanuel’s proposal to fix the city’s beleaguered pensions was met with mixed reaction on Wednesday, particularly from the nearly two dozen people vying for his job.
Speaking before the regularly scheduled City Council meeting, Emanuel explained the four steps he thinks could save the pensions from insolvency: borrowing, legalizing marijuana, opening a casino in Chicago, and amending the state constitution.
Of the candidates WBEZ spoke with Wednesday, all favored legalizing marijuana and opening a casino in Chicago as ways to generate revenue that could help shore up the pensions. They differed, however, on the bolder parts of Emanuel’s plan: borrowing and changing the state constitution to allow pension benefits to be slashed.
Borrowing, using so-called pension-obligation-bonds, would have the most immediate impact and could be done without the state legislature. Emanuel is moving to set the legal groundwork to borrow money, but his office has said he’d leave it to the next mayor to decide whether to go ahead with it.
The mayor argued it could save taxpayers $10 million over the course of the next 40 years. The city’s four pension funds are projected to be short by $28 billion dollars. State-mandated payments will more than double over the next five years, from just over $1 billion this year to $2.1 billion in 2023.
Mayoral candidates Lori Lightfoot and Paul Vallas both cautioned against this form of creative, but risky borrowing when it was first floated over the summer.
Lightfoot, a former federal prosecutor, called for a “detailed plan” with “an independent analysis, substantive debate in City Council, and multiple public hearings.”
Vallas, the former head of Chicago Public Schools, said Wednesday he’s still vehemently against borrowing and said the mayor is just trying to “grease the skids” to get a deal done that will benefit many of his top supporters in the legal and financial services industry.
“This is another step toward getting that before the City Council and getting that approved before he leaves office,” Vallas said. “If it’s a great idea, great, I’ll do it when I’m mayor… but it’s a terrible idea.”
Lawyer Gery Chico, former school board president and 2011 candidate for mayor, said he was skeptical of the borrowing being proposed by Emanuel at first, but after researching it and talking with financial experts, he’s changed his view.
“I’ve now come to the position that if it’s done as a greater number of parts of the solution, it’s a good thing to do,” Chico said.
Candidate Dorothy Brown also said she would take the borrowing plan “into serious consideration.” She proposed creating a city-sponsored lottery in addition to opening a Chicago casino to generate revenue for pensions.
Emanuel’s other big idea for fixing the pensions, changing the state constitution, got a chilly reception from mayoral candidates, incoming Democratic Gov. J.B. Pritzker, and other Democrats whose support would be necessary to get it done.
Democrats will control the statehouse with a veto-proof majority come January. A constitutional amendment would need approval from three-fifths of state lawmakers, and be okayed by voters in 2020.
Illinois governors don’t have a role in that process, but Pritzker made it clear that he wouldn’t expend any political capital on a constitutional amendment.
“My commitment is to pay the pensions that are owed to people,” Pritzker said. “I just don’t see the likelihood of anybody getting a constitutional amendment passed to change that provision in our constitution. And it’s not something that I’m out promoting.”
Chico, Lightfoot, Illinois Comptroller Susana Mendoza and businessman Willie Wilson all opposed the idea. Vallas said changing the constitution is not politically feasible: “I just don’t see it happening.”
Many labor unions supported Pritzker for governor. Mayoral candidates and aldermen rely on unions to fund their campaigns. Taking a stance in favor of changing the constitution in a way that would allow cuts to retiree benefits could get them in trouble with labor unions.
Bill Daley, former White House chief of staff and brother of former Mayor Richard M. Daley, said everything must be on the table, including a constitutional change.
“One thing that cannot be on the table is more property taxes,” he said in an emailed statement. “We also need to embrace a growth agenda in Chicago and Illinois and the pension issue is an anchor around our necks.”
Cook County Board President Toni Preckwinkle, who presided over a county board meeting on Wednesday, didn’t address Emanuel’s specific proposals, but touted the work she’s done on pensions for county workers.
“We face pension challenges ourselves here in Cook County and we made tough decisions that put us on a sound financial footing,” Preckwinkle said.
Emanuel emphasized that no single piece of his proposal will solve the problem and that they must all be done in tandem with one another. He also pre-emptively responded to critics of his plan.
“I believe in the pension,” Emanuel said after his speech. “There are other people who are trying to undermine that because they don’t believe in a defined benefit retirement system.”
“What they’re trying to do is undermine pensions, I’m trying to save pensions,” Emanuel said, noting that current benefits, like the annual three percent cost-of-living adjustment for retirees, are unsustainable and need to be adjusted if the pension systems are going to survive.
“I’m trying to save it from itself,” he added.