I’ve not been posting much about the mess in Chicago. But it’s a real financial mess.
To bail out the insolvent Chicago pension funds (26% funded), they want to combine theirs with the semi-solvent pension funds (55% funded) from the rest of the state.
If my pension were from down-state Illinois, I wouldn’t want it used to float the mismanagement of Chicago.
It didn’t take long for new Chicago Mayor Lori Lightfoot to propose a plan that would wash her hands of Chicago’s pension crisis altogether. According to a recent report in Crain’s, Lightfoot wants the state to take over Chicago’s pension debts and merge them with the other pension plans throughout the state. The move would make all state taxpayers responsible for paying down the city’s debts.
The plan to shift city debts to the state would bail out the mayor from having to raise about $1 billion in additional taxes to pay for increasing pension costs by 2023. A massive tax hike is something she’s desperate to avoid.
But while Lightfoot may think the cost-shift is a solution, it will only make things worse for Illinois. She should expect significant pushback from many sides.
Start with downstate and suburban residents. Sure, their public safety pension funds would get consolidated under the state, too, but it’s the Chicago funds that are some of the biggest and worst-funded in the state. The four city-run funds are collectively funded at just 27 percent and face an official shortfall of $28 billion.
In contrast, the 650 downstate pension plans are 58 percent fundedand have a shortfall of nearly $10 billion. The end result of any statewide pooling of pension funds will be a net bailout for Chicago.
Lightfoot wants state taxpayer bailout of Chicago pension debts | Wirepoints
It didn’t take long for new Chicago Mayor Lori Lightfoot to propose a plan that would wash her hands of Chicago’s pension crisis altogether. Lightfoot wants the state to take over Chicago’s pension debts and merge them with the other pension plans throughout the state.