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On Governor J.B. Pritzker’s desk is a proposal to give more benefits to Chicago unions.
 

Big Unaffordable Sweetener

The Illinois Policy Center comments on the Fiscal Recklessness of Illinois Politicians.

In the final days of session, Illinois lawmakers approved House Bill 3657, a pension “sweetener” for police and firefighter employees under Tier 2 pensions that would swell the city’s already staggering retirement debt. In the first year, it would cost $52 million to implement. By 2055, it would add $11.1 billion in accrued liabilities, according to city estimates.

Equable’s annual public pensions report shows seven of the nation’s 10 worst-funded local pensions are in Chicago. Chicago firefighters are in last place. Chicago Police are in third-to-last place. Both plans have about 25 cents of every dollar promised to workers.

HB 3657 boosts Tier 2 by changing the method used to calculate the final average salary for Chicago police from the average of the last eight years to the higher average between the last eight years or the last four years. By contrast, Social Security looks at the average earnings over the course of a worker’s entire career. This shorter time period reintroduces the risk of end-of-career pay spikes that drive up pension liabilities.

Another change it introduces for both Chicago police and firefighters is to the salary limit beyond which no higher pension can be earned. Currently, it sits at $127,283 and increases at the lower of either one-half of inflation or 3%. If this legislation is signed into law, it would instead increase at the lower of either the full rate of inflation or 3%, and start with a boost to $141,408 on July 1, 2025.

The city already faces a projected $1.2 billion budget shortfall in 2026, low credit ratings and the threat of higher property taxes. Now is not the time to be adding costs.

HB 3657 reached Gov. J.B. Pritzker’s desk on June 24. Illinois law gives him 60 days to sign, veto or amendatorily veto a bill.

That means he faces an Aug. 23 deadline to decide between a common-sense refusal or an approval that brings Chicago even higher property taxes and sinks city pensions closer to insolvency.

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