From AP - News Local/State -

Gov. Quinn Signs Chicago Pension Overhaul

Pat Quinn

Illinois Gov. Pat Quinn called members of the Legislature back to work for a special session to help resolve the pension crisis. (Seth Perlman/AP)

Gov. Pat Quinn has signed legislation that would help Chicago reduce a multibillion-dollar pension shortfall but could lead to a property tax increase.

Quinn is a Chicago Democrat facing re-election this fall. He had given little hint of his plans ahead of Monday's announcement, aside from saying that he opposes raising property taxes.

Chicago has the worst-funded pension systems of any major U.S. city.

Mayor Rahm Emanuel pushed for the law. It would affect about 57,000 laborers and municipal employees and retirees. It would nearly eliminate the $9.4 billion shortfall in those funds by cutting benefits and increasing contributions for the city and employees.

Emanuel has said he wants the additional contributions to come from a property tax increase, but some of the city's aldermen oppose that idea.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.

Gov. Pat Quinn said his upcoming Monday decision on whether to sign legislation overhauling two Chicago pension systems will be according to his conscience and what he thinks is best for Illinois communities.

The Chicago Democrat faced a Monday deadline to sign legislation addressing municipal employee and laborer pensions, but has given little hint about his plans.

The legislation on his desk would nearly eliminate a $9.4 billion shortfall in those funds by cutting benefits and increasing contributions for the city and employees. Chicago Mayor Rahm Emanuel wants additional revenues to come from a property tax increase, but some aldermen oppose that idea.

Quinn has said he doesn't want to raise property taxes, but said little else.

"I think everyone wants the governor to carefully review every single bill passed by the Legislature to make sure it's the right thing to do for Illinois," he told reporters after an unrelated event in Chicago. "I'm going to look at the individual points of the bill like I do with every single bill and make a decision according to my conscience on what I think is the best thing for our state and for all the communities of our state."

He said it's a complicated bill.

Chicago has the worst-funded retirement systems of any major U.S. city and has yet to address police and fire department pensions. There's an approximately $20 billion shortfall in four accounts and another $7 billion debt in the fund for teachers.

The shortfall is largely the result of years of the city not making large enough contributions to the funds. Emanuel, who inherited much of the problem from the previous administration, has said the changes are needed to avoid an even larger tax hike, severe cuts in programs and services and the potential insolvency of the city's retirement funds.

If Quinn signs it as is, the move could be seen as leading to a property tax increase in Chicago during an election year. If he rejects the bill, Quinn would be in conflict with fellow Democrat Emanuel.

Pension programs are created by state law, so only state legislators can make changes.

Lawmakers last year approved a sweeping overhaul to reduce the state's $100 billion pension shortfall debt. The plan would cut workers' and retirees' benefits and is already the subject of legal challenges.

Categories: Economics, Government