Emanuel and Quinn discuss pension reform

State's top Democrats focus on teacher pensions at Tribune forum

Thursday, April 05, 2012

Gov. Pat Quinn and Mayor Rahm Emanuel say it's unfair that Chicago homeowners foot the bill for city teacher pensions but also join taxpayers from the rest of Illinois in paying for retirement benefits of suburban and Downstate educators.

The need to overhaul public employee pensions at the state and local level was the dominant theme at a Wednesday night Tribune forum featuring two of the state's major Democrats.

Rising pension costs, the result of politicians' promises stretching back decades, threaten to gobble up state and city budgets. Emanuel suggested Illinois look at changes Rhode Island adopted last year that included suspending cost of living adjustments for retirees, upping the retirement age and requiring workers to go into a new retirement plan.

Quinn, who is awaiting recommendations from a pension reform panel that are expected this month, did not commit to a course of action. "My philosophy is nobody's going to get scalped, but everyone's got to get a haircut," the governor said, using one of his favorite lines on the issue.

The comments by Quinn and Emanuel signaled a renewed effort toward comprehensive pension reforms that would include an attempt to shift at least a portion of pension costs for teachers outside Chicago to the property tax bills of residents elsewhere in the state.

"The city of Chicago, taxpayers of Chicago, are footing the bill for everyone else. We're not doing double duty," Emanuel said. "It's got to come to a halt."

Emanuel said the state and city have reached "a moment of truth" on the issue of vastly underfunded public employee pensions.

"The workers and taxpayers have done everything asked of them," the mayor said. "The people in a responsible position have not."

Quinn said he doesn't think it's fair that only Chicago paid its teacher retirement costs. Local school districts are employers, he said, and "they should have a stake in the retirement of their own employees." As for shifting some of the pension burden, Quinn said: "We can face this and do it in a way that's reasonable."

About 700 people paid $15 each to watch the hourlong interview conducted by Bruce Dold, the Tribune editorial page editor. The event at a sold-out Simpson Theater at the Field Museum was part of the Tribune's "Chicago Forward" series. The forums are typically co-sponsored by corporate advertisers, in this case ComEd.

Emanuel and Quinn's relationship was strained last year when the governor thwarted a Chicago casino gambling expansion plan the mayor helped push through Springfield. Gambling supporters have vowed to bring back a revised bill.

"I just met the mayor of Hammond (Indiana) the other day. That's where the city of Chicago casino is: Hammond," Emanuel said.

Quinn maintained "we should have one in Chicago" and some additional locations, but "we don't want wide-open gambling."

The two powerful politicians said they are in contact at least once a week. Quinn, however, said he does not use text messages to do so.

"Many times our interests overlap," Emanuel said. "Sometimes they don't overlap. He advocates for Illinois. I advocate for Chicago. Many times we align. Sometimes we diverge. We trust each other. I don't think that's a shock, or that people would want it any other way."

The governor was asked what he needs from the mayor this year.

"The mayor is a persuasive fellow," Quinn said. "I really feel that we have to have a better budget in Illinois. We really do have to do hard things like restructure Medicaid and strengthening the pension systems and having a budget that invests in education in particular. I'd ask the mayor to use his persuasive ability, legislative, both parties, to help us get there."

The mayor's appearance came after City Budget Director Alexandra Holt indicated earlier Wednesday that the city is turning to an infrastructure trust approach on major projects because it is carrying a "sizable" amount of debt.

The city typically pays for large-scale public works projects by borrowing money. The bonds are then paid off with city revenues, typically property taxes. Last year, the Civic Federation, a nonpartisan budget watchdog group, warned that city debt had nearly doubled in the past decade and that more borrowing could further lower the city's credit rating.

Holt addressed that issue at a City Club of Chicago luncheon.

"We go out, we levy property taxes, we issue debt against it. The city has a sizable property tax, er debt service load, and one that — we've been talking about how we handle on a going-forward basis, right?" Holt told the crowd.

"So, what we're talking about with the infrastructure trust is to look at other mechanisms for financing, right? And ones that don't tie directly to the property tax levy and (bonds)," Holt added.

When questioned later, Holt backed off, saying the trust is "not so much about property taxes but accessing new ways of financing. ... They are ways of financing that are very common in the private sector and in other governments."