Chicago's Mayor Daley Discusses Bankruptcy For City Pensions

[Silver and Gold]

Saturday, December 11, 2010 12:56 PM



Chicago's Mayor Daley Discusses Bankruptcy For City Pensions


Mayor Daley is begging Governor Quinn for pension reform.

Quinn now has on his desk a bill that would allow state to withhold sales tax and income tax revenue from cities that won't do more to fund their pension plans.

Property taxes will have to go up for cities to meet their pension obligations and that is on top of a massive income tax hike that governor Quinn campaigned for.

Daley, aldermen ask Quinn to veto pension measure

The Chicago Tribune reports Daley, aldermen ask Quinn to veto pension measure

Mayor Richard Daley this afternoon expressed his frustration with the city's pension situation, suggesting that the retirement funds need to be fixed before leaders are forced to declare them bankrupt as a way to restructure.

Speaking on a Global Metro Summit panel at the University of Illinois-Chicago with Philadelphia Mayor Michael Nutter and Los Angeles Mayor Antonio Villaraigosa, Daley at first appeared to indicate that allowing the pensions to go bankrupt so they could be reorganized was something he believes could happen.

"I’m one who believes that pension funds can go bankrupt and then you reorganize, and that’s the hardest thing to say," Daley said.

Moderator Richard Stengel, managing editor of Time Magazine, then asked Daley: "Let them go bankrupt?"

“Yes, and then you reorganize it," Daley replied.

The mayor's comments came after much of the Chicago City Council sent a letter to Gov. Pat Quinn today urging him not to sign a pension reform bill passed by the General Assembly and Daley again lambasted the plan.

Daley has been publicly attacking the bill at every opportunity over the past week, saying it would lead to the biggest property tax increase in Chicago history. Daley said he doesn't know whether Quinn will listen to Chicago officials' pleas not to sign the legislation, but he said he and Quinn have different views on raising taxes.

"(Quinn) wants to tax people. What can I do?" Daley said.

"We can't go tax crazy, but people may want to go tax crazy," the mayor said.

The bill requires municipalities move toward funding police and fire pensions up to 90 percent of obligations by 2040, and allows the state to withhold sales tax and income tax revenue from cities that don't do so. Daley says that to meet the pension funding standard would require a $550 million property tax hike in Chicago.

A letter to Quinn signed by 43 of Chicago's 50 aldermen acknowledges the need for pension reform, but says any legislation should include increased employee contributions and lower benefit payouts.
Now?! Why Now?

Now Daley is whining. Now?! Why Now?

He should have thought about this before the election. Quinn campaigned on a pledge to raise the state income tax by 33% (from 3% to 4%) thereby buying the vote of every public union worker in the state.

Who is to blame if not Daley and idiots in Chicago who voted to return Quinn to office by a margin of 87% to 13%, hundreds of thousands of votes.

All it would have taken to defeat Quinn was one simple statement by Daley endorsing Bill Brady. Quinn won the election by 19,000 votes out of over 3.6 million cast. Quinn's margin of victory was 46.6% to 46.1%.

Daley could have gotten any favor he wanted for endorsing Brady. Any! But no! Daley sat on his ass and let this happen.

Chicago deserves to suffer. The whole rest of the state shouldn't have to. But it will, and Mayor Daley is to blame.

[saintiaint]

IMHO it is the only way out. the property values no longer exist;if they ever did. jobs are drying up; sales tax is in many cases beatable; bond sales;to who? where can the $$ come from? I think once the ball starts rolling it will be commonplace to see districts go belly up.Chaotic period is coming!

[FriedNietz]

This is an old article ( Dec. 2007 ) but he nails it exactly in my opinion. It's a quick read and forecasts the situation that the pension funds are in now.
It's really just another case of the Robber Barons fleecing the sheep yet again.

http://www.glgroup.com/News/Hedge-Fu...es.-20276.html

[Jimdaddi]

Oh My!! What the hell did the people who negotiated these fat pensions think the money would come from? If the public sector gives out 80% pensions after 20-25 yr of service any 6th grader could probably figure out the disaster you would be creating . In Massachusetts the state worker pension funds by law must earn 5% interest per year or the state has to make up the difference!!!! While the private sector loses 40-50% per year and are on their own. The feathering of the public sectors' nest, on the backs of people who mostly don't have pensions at all is soon to end. This cannot come soon enough, IMO

[Junk Collector]

Not to mention that the public is getting upset with the general way government is run. There are more chiefs than indians and it seems to take 10 people to accomplish the work of 1. Everytime I drive down the street I see the public works guys just standing around observing while two of them are working. Yet they all get yearly raises and a fat pension too. Perhaps government should let business take over most of the departments and run them more effectively.

[badfrog101]

I sold my business in an overtaxed eastern city this year, and the breaking straw was over raised taxes, mine and the ones my clients couldn't pay. New England has been financially stuck for decades, and a big part of it is over public employees union salaries and pensions. About 20 years ago Connecticut put most of it's welfare clients to work as public employees, who have loyally been voting Democrat since. The cities experienced the quickest white flight ever seen, and now they are broke, and CT has the highest debt per capita of all 50 states, as they deserve. But the politicians have had a heckuva 20 year ride on the dime of the productive people. In the meantime, the only big businesses that are left are on govt subsidies, making war materiel. If the Republicans succeed in stopping earmarks, New England is going to be so screwed.