The Tribune Digs Deep, Finds Out How Effed City Pensions Are
By Karl Klockars in News on Nov 17, 2010 7:40PM
One of the benefits of the end of the election cycle is that news operations can turn their attention away from who's a witch and who's killing puppies, and get back to nuts-and-bolts coverage of issues that affect the day-to-day operations of government. Which is why we're pointing you toward the exhaustive look at the city's pension system and how terribly effed it is, printed in today's Tribune.
Rather than rehash it for you, we suggest you just go read it. We'll bullet-point some of the salient "oh shit" moments for you, though:
- "Even if all retirement benefits were cut off today, every man, woman and child in Chicago would owe more than $7,000 to cover obligations already incurred — an amount that doesn't include state pension debt of about $60 billion."
- "By the end of this year, however, not one of the pensions' funding levels will be above 70 percent. The police and fire funds are already below 40, and the municipal fund is below 50. Pension experts say funding levels below 80 percent place the long-term viability of pensions in jeopardy and are nearly impossible to overcome without massive borrowing, painful tax increases, cuts to benefits and increased contributions."
- "In essence, the city has been cutting deals that cost billions of dollars without actually paying for them."
And the real bombshell:
- "The total unfunded liabilities for pensions funded by city taxpayers, meanwhile, now hover around $20 billion. But some experts peg the number closer to $40 billion."
The worst part of the situation, and the one that goes unsaid in this investigation, are the tough realities on the horizon. In today's political climate, the only solution at the front of everyone's mind is to cut, cut, cut. Now that the city's reserves have had the blood squeezed out of the proverbial turnip to get the Mayor out of one last budget battle without breaking a sweat, any sort of cushion is gone. Will city services be slashed? Will the pensions that civil servants spent their lives earning be wiped out? Pat Quinn's income tax hike looks less and less likely by the day.
And sadly, the attitude towards public service pensions is more likely going to be "why should they get a pension when I don't get one" as opposed to "why aren't I getting a pension myself?" If there were ever an issue that could create a Democrat version of a Tea Party, facilitating the reduction or destruction of workers' retirements would be a good spark to light that fire.
The Trib's blame is being shared out between Mayor Daley's pension code rewrites to get more cash to Chicago Public Schools, combined with the rampant rewriting of the rules that was done downstate to balance budgets without much consideration as to what the financial results might actually be. The irony of Mayor Daley counting on a city Machine based on patronage jobs and votes to keep his office, and then leaving their lifetime benefits twisting in the wind as he walks out the door, should be lost on no one.