Editorial: Chicago's pension precipice: It's worse than you thought.

Chicago Tribune ^ | 4/3/2018 | Editorial Board

[Beave Meister]

Chicago taxpayers, prepare for another kick in the teeth. In fact, it might be a good time to grow fond of the toothless grin. Another recent court decision will put taxpayers on the hook for additional city pension debts. Yes, even more than before.

A circuit court judge in March struck down a 2014 state law that eased pressure on the pension fund of Chicago Park District retirees. The law had increased Park District employees’ own contributions to the fund, increased their retirement-eligible age, reduced their annual cost-of-living increases and reduced duty disability benefits. But those changes will be rolled back, due to the ruling.

That means the Park District — you, taxpayers — will have to come up with reimbursements for workers’ higher contributions, plus interest. Going forward the district will have to figure out how to stabilize the retirement fund without those cost-saving changes. Chicago’s pension funds — for municipal workers and laborers, teachers, police and firefighters, and now Park District employees — face serious unfunded liabilities. The Civic Federation estimates the Park District fund has about 39 percent of what it needs to make future benefits payments.

The judge’s ruling came on top of a recent analysis of the Chicago Public Schools teacher pension fund that showed taxpayers will owe another $1 billion to shore up that retirement account, bringing that unfunded liability to $11 billion.

[JohnBovenmyer]

Methinks the IL constitution says that pensions can’t be ‘diminished or impaired.’ So instead ‘tax’ them. Extremely rare for politicians, especially good lib ones like those running Chicago and its pet state for years to say they can’t tax anything they can think of taxing. I’m not aware the IL constitution includes any such language. So let them get their pension benefits then tax most of them right back. If they can tax something as specific as non-diet sodas, why not tax pensions from state or local government in IL? Make it nice and progressive so the small pension folks don’t take as big a hit, but the big pensioners earning far more than they’d ever ‘need’ and who have also been earning big salaries all along (so far as I can tell the main reason IL pensions were ‘underfunded’ was that their funding kept being diverted to current pay .hikes.) Just make their total compensation retrospectively honest.

[Lurker]

“Methinks the IL constitution says that pensions can’t be ‘diminished or impaired.’

Correct. Section 23 in fact. It’s already been litigated to the Illinois Supremes.

“So instead ‘tax’ them.”

That’s next, for sure. Of course any Dem politician who votes for it will be run out of town on a rail by the union goons. Then there’s the small problem of taxing the pensioners who’ve already moved out of Illinois.

L

[JohnBovenmyer]

Then there’s the small problem of taxing the pensioners who’ve already moved out of Illinois.

No problem, thanks to what Milton Friedman said was his worst mistake: withholding. Their pensions originate in IL governments. Treat them as the delayed payroll the are. Take out at least what you guess they owe before you send them. Being liable for state taxes in multiple states from income earned in multiple states is already the norm. And if they don’t file a return withhold more or even all of it. Bet Illinois will find it has as many graveyard pensioners as it has graveyard voters! Requiring a return would help clean out the former.