‘Unsustainable’ pension woes hang over Chicago, Lightfoot says: In a speech to potential investors, the mayor combines optimism about the city’s future with a dire warning

Link: https://www.chicagobusiness.com/greg-hinz-politics/chicagos-recovery-clouded-unsustainable-pension-woes-lightfoot-tells-investors

Excerpt:

Coupling a boatload of optimism with a dire warning, Mayor Lori Lightfoot told investors from around the country that Chicago is well positioned to recover from the COVID-19 pandemic and is a good place for them to allocate their cash.

But her remarks May 6 were far different on the subject of underfunded city pension funds, a problem that has bedeviled mayors for the past two decades.

Though workers deserve what they’ve been promised, she said, “that promise will not be met” unless Springfield lawmakers come to the table with financial aid or other reforms.

….

Lightfoot did not use the word “default.” But some financial experts have warned that some of the city’s four pension funds, particularly those covering firefighters and police, may have trouble paying promised benefits within a few years if they don’t get help.

Author(s): Greg Hinz

Publication Date: 10 May 2021

Publication Site: Crain’s Chicago Business

When ‘closing corporate loopholes’ goes wrong

Link: https://www.chicagobusiness.com/greg-hinz-politics/when-closing-corporate-loopholes-goes-wrong

Excerpt:

And that’s the context of that big $932 million tax hike on business Gov. J.B. Pritzker is pushing as part of his proposed 2022 budget.

Pritzker calls the proposal “closing corporate loopholes.” Arguably that’s true, at least in the sense that any tax break I don’t receive must be someone else’s undeserved loophole. But the proposal comes at the very time when population and jobs have begun to drop not only statewide but in the metropolitan area, and at a time when the state refuses to confront its ever-rising pension debt. Not to mention Chicago’s murder and car-jacking wave. Or what Cook County Assessor Fritz Kaegi is up to.

…..

In fairness to Pritzker, Illinois is not the only state to be moving its tax structure in his proposed direction, at least in part. For instance, according to the Tax Foundation, a Washington research group that’s fairly conservative but also frequently cited in economic circles, only 16 states grant the full accelerated depreciation that’s now in federal tax code. Pritzker’s proposed change there is worth $214 million a year.

Author(s): Greg Hinz

Publication Date:

Publication Site: Crain’s Chicago Business

If Pritzker and Welch really want voters’ trust, they’ll do this

Link: https://www.chicagobusiness.com/joe-cahill-business/if-pritzker-and-welch-really-want-voters-trust-theyll-do

Excerpt:

If Pritzker and Welch are serious about winning trust, they’ll allow Illinoisans to vote on a standalone constitutional amendment repealing the so-called “pension protection clause.” To build public support and treat retirees fairly, such an amendment could be narrowly drawn to permit only reductions in future pension increases under the COLA mechanism.

Sure, public employee unions are likely to fight any change in pensions. But it’s worth trying to win their support. It can be done; Arizona unions backed a narrow amendment to a pension protection clause in that state’s constitution. If unions won’t cooperate, Pritzker and Welch should forge ahead anyway, as Rhode Island officials—led by Democrat Gina Raimondo—did in tackling a similar pension crisis.

Only after passing such an amendment and reducing the overall pension obligation can state officials justifiably ask taxpayers for money to close the remaining gap. Would a graduated income tax be the right way to raise the necessary revenue? Maybe. I’m not opposed to it on principle. The vast majority of states with an income tax charge higher rates on higher incomes. And the necessity of a constitutional amendment would give voters the final say.

Author(s): Joe Cahill

Publication Date: 25 February 2021

Publication Site: Crain’s Chicago Business

When it comes to pensions, we have crises of leadership on more than one front

Link: https://www.chicagobusiness.com/greg-hinz-politics/when-it-comes-pensions-we-have-crises-leadership-more-one-front

Excerpt:

I’m not saying solving Illinois’ pension mess will be easy. It won’t. But dead silence surely won’t solve it. Voters hired Pritzker to fix problems. On this huge problem, he’s been a sad failure.

Which leads to pension story No. 2: That’s the utter turmoil that seems to have overtaken one of the larger public retirement systems in the state, the $11 billion Chicago Teachers’ Pension Fund, which receives a nice chunk of Chicago homeowners’ property tax payments every six months.

When I last looked at the fund in October, its executive director and other key officials had just resigned, one commissioner had been censured by other board members, and board President Jeffery Blackwell was publicly complaining of an agency “culture of intimidation, intentional misinformation, discrimination, slander, misogyny, fear-mongering, blatant racism, sexism and retaliatory actions.” But interim Executive Director Mary Cavallaro said in a statement there was no reason to worry, and that “the fund is committed to ensuring financial stability, operational efficiencies and seamless service to members.”

Well, guess who now has resigned—with a blast? That would be Cavallaro. “I can no longer tolerate the chaos and toxicity of the boardroom, along with the vile disrespect and insults directed toward me, the leadership team and the hard-working staff of the fund by certain misinformed trustees,” she said in a letter to the board. “I have grave concerns about the ability of fund operations to sustain the continued loss of key staff members because of bad trustee behavior and poor board governance.”

Author(s): Greg Hinz

Publication Date: 18 February 2021

Publication Site: Crain’s Chicago Business