Latest news with #RobertMartwick
Chicago Tribune
16-07-2025
- Business
- Chicago Tribune
Civic leaders: Gov. JB Pritzker should veto bitter pension sweetener for Chicago
In the waning hours of the state legislative session, Springfield lawmakers unanimously passed a new mandate on city of Chicago taxpayers that will cost $60 million next year and top out at about $750 million in the coming decades. Gov. JB Pritzker should veto it. This pension sweetener legislation, shepherded through the legislature by state Sen. Robert Martwick, D-Chicago, with little to no public debate, will boost pension benefits for Tier 2 police officers and firefighters, those who began work in 2011 and after and who fall under a different pension plan than their more senior colleagues. The legislation makes changes to how pensionable salary is calculated at retirement — including by increasing the cap on pensionable salary — and would increase the annual cost-of-living adjustment for pensioners. Our three organizations support reasonable retirement benefits for public employees, but we also strongly believe that the people who pay the taxes should be prioritized, too. In this case, they weren't, and the legislation, which was sent to the governor's desk, makes a very bad situation even worse. It would be a bitter pension sweetener, indeed. Right now, Chicago police and fire pension funds are grossly underfunded. Specifically, city taxpayers owe current and future retirees about $20 billion more than they have to pay police and firefighter pensions. Illinois taxpayers have an even worse problem, owing about $144 billion more than they have. For both city and state, the ratio of assets on hand to pension obligations is among the lowest in the country — around 25% funded for the Chicago police and fire funds. Chicago and Illinois have among the most underfunded pension systems in the entire country. Taxpayers are on the hook for a combined state and local pension tab of $459 billion, or more than $90,000 per household. No one wants to be miserly when it comes to our first responders. They risk their lives to protect ours, and we deeply appreciate their service. But our appreciation for their work does not erase the daunting mathematical dilemma we face as a city and a state with ever-increasing pension costs and no responsible plan to fully fund them. This new mandate comes at a time when both the city and the state are facing enormous fiscal uncertainty. The Chicago regional transit system has never recovered ridership levels since the pandemic and is now facing the possibility of extreme service cuts. A proposal to rescue and reform the system, and address a $771 million 'fiscal cliff,' fell short in the spring legislative session. What little remains of pandemic relief dollars from the federal government is drying up. The Trump administration is threatening funding cuts to both the city and the state. And the president's newly adopted budget could cut billions in federal Medicaid funding to Illinois. For years, our organizations have called for policymakers to resolve the unfunded pension issues. We have engaged with stakeholders across the state, including labor, and been open-minded about solutions, including higher taxes — so long as the incremental revenue is devoted entirely to pension funding. We have recognized and accepted the constitutional restriction on reducing benefits for current employees. And our organizations saluted state leaders when they passed the Tier 2 legislation over a decade ago to better manage benefits for future retirees and when they blocked an end-of-session effort in late May that would have added an estimated $60 billion in new benefits to the state pension systems. But now, the bill on its way to Pritzker's desk would undo much of that work, making the city less affordable, putting its credit rating at risk and shifting the cost to future generations. Illinois politicians have been doing this to the city for decades, and we are hopeful that our governor will end this fiscally irresponsible practice. At a minimum, we should have an honest assessment of the short- and long-term costs and consequences. We urge Pritzker to veto this legislation, and we also urge every member of the legislature to reconsider their position. Although they voted unanimously in favor of the sweetener just before the session gaveled to a close, they might reflect more deeply on the long-term costs and choose not to override a fiscally astute governor's veto. We also call on Chicago Mayor Brandon Johnson and aldermen to be vocal in opposition to this legislation, making it clear to the public and state leaders that they do not support an unfunded pension mandate that will significantly worsen an already-precarious budget situation. Now that the governor has announced plans to run for a third term, we implore him to build on his strong record of improving the state's finances by prioritizing a long-term plan to stabilize state pensions. And we call on Chicago's mayor and the City Council to create a companion proposal at the local level. We stand ready to help.
Wall Street Journal
07-07-2025
- Business
- Wall Street Journal
How Chicago Became a Fiscal Mess
Chicago is drowning in pension debt, but you wouldn't know it from the machinations in Springfield. At the end of the recent legislative session, lawmakers pushed through a last-minute pension sweetener for Chicago police and firefighters that will add millions in new debt the city can't afford. The measure awaits Illinois Gov. J.B. Pritzker's signature. Sponsored by state Sen. Robert Martwick, a Chicago Democrat, the bill would raise the salary used to calculate pension benefits for so-called Tier-2 retired police and firefighters, those who were hired after Jan. 1, 2011. The change would raise the cap to $141,408 from $127,283 and automatically raise it 3% a year or the rate of inflation, whichever is lower. It also rejiggers the salary calculation for retirees to be based on their highest earning final years.
Chicago Tribune
11-04-2025
- Business
- Chicago Tribune
David Greising: State action on pension reform is slow. That may prove auspicious in the end.
Not so long ago, there was hope that major pension reform could happen sometime this year, possibly by the end of the spring legislative session. But events are not playing out this year. Two big topics have consumed the legislature's attention this spring: expunging a projected $3.2 billion budget shortfall in order to deliver a balanced budget, and addressing a $771 million funding shortfall for the four transit agencies in the Chicago area, including the prospect of merging them. Unions are taking advantage of the relative inattention to the pension issue by pushing for a change to the state's Tier 2 pensions — reduced benefits, offered to employees who started work for the state beginning in 2011. There is concern that the pension payments don't or won't keep up with Social Security benefits, which would violate federal policy. Editorial: Springfield doesn't seem to know the scope of its 'Tier 2' pension problem. How about we find out? Late last year, a group of unions held a Springfield rally under the theme 'Undo Tier 2.' The slogan is shorthand for efforts to claw back cost-saving measures and regain the unusually generous benefits that contributed toward Illinois' worst-in-the-nation pension underfunding. Sweeping pension reform may be on the back burner for now. But after a trip to Springfield this week, I'm pleased to report the lack of intense pressure is possibly allowing time and space to find a path toward a resolution of one of the state's most intractable problems. Sen. Robert Martwick, chair of the Senate's Pensions Committee, opened a hearing on pension reform by observing it takes two key factors to fix pensions: money and math. It takes money, because fixing $144 billion in pension underfunding will involve lots of state dollars over an extended time. And it takes math, because any effective fixes will involve sophisticated calculations about income tax; the sale of pension obligation bonds; even the sale of complex instruments to help smooth the pension deficit in later years. (Trust me; I've done the math. They would help.) In other words, merely understanding the scale of Illinois' pension problem is complicated enough. Devising the tools to fix it could require a degree in public finance, not to mention a talent for political finesse. To date, three main proposals have emerged. And for months, these ideas existed in isolation from one another. But at the Martwick hearing, and in conversations I had with key actors leading up to it, there were signs that some of the best ideas might converge and that a workable solution could emerge from the very deliberative process that has led us to this point. The Civic Committee of the Commercial Club of Chicago has a comprehensive and ambitious plan, the key funding mechanism of which is a 0.5% surcharge on individual income taxes over 10 years. For two years, the Civic Committee has resisted adjustments to its proposal. But at the hearing Wednesday, the business group's leader, Derek Douglas, allowed that some adjustment to the Civic Committee's proposed tax surcharge might be acceptable, if such a switch helped pension reform progress. The Center for Tax and Budget Accountability, a liberal-leaning think tank, last fall overhauled its pension reform proposal. Its key feature is the sale of $9.6 billion in bonds over five years, in order to help pay down the state's pension debt. The CTBA previously had argued that the state should be satisfied if it can bankroll enough money to meet 80% of its pension obligations — up from its current 46% funding ratio. After criticism that such a low goal, if adopted, would torpedo the state's credit rating, the group's leader, Ralph Martire, on Wednesday was arguing in favor of seeking 100% funding. In other words, the CTBA proposal now aims for the same goal — a fully funded pension system — as the plans put forward by Gov. J.B. Pritzker and the Civic Committee. This clears the way for consideration of all three proposals on their merits, including the controversial approach of selling bonds in order to pay the state's pension bill. For the time being, Pritzker is letting his existing pension-reform proposal speak for itself. Its key feature would cause little pain: As existing bond issues are paid off, including $10 billion in pension bonds sold by Rod Blagojevich when he was governor, Pritzker would apply half the amount previously paid on those bonds toward paying down the pension debt. The other half would go toward rebuilding the state's rainy day fund. The big news I heard this week regarding Pritzker's approach doesn't involve adjustment to his plan. Rather, it involves a negotiating stance that could be immensely powerful and do the state a lot of good. A fix to Tier 2 is part of Pritzker's plan — ' if necessary,' the precise wording in his budget pointedly notes. What's more, I'm told, Pritzker likely will not back a Tier 2 fix unless it is part of a more sweeping reform of our state's $144 billion in pension underfunding. Pritzker would be wise to pursue such a stance. For starters, the burden of proof of the need to 'fix' Tier 2 should be on those who say the benefits do not meet minimum federal requirements. And on top of that, any Tier 2 fix should be undertaken only as one step in a more sweeping reform. By pairing the two objectives — addressing Tier 2 and the worst-in-the-nation pension underfunding at the same time — Pritzker could help apply the energy behind efforts to fix Tier 2 toward the more costly, more complicated and more consequential reform of the entire state pension system. Pension reform is not happening quite as fast as some had hoped. It would be good if all parties take this extra time to get the reforms right. David Greising is president and CEO of the Better Government Association.
