Page 11 - December 2015

Property tax increase or your pension?
No one is happy with the property tax increase, but right now it is the only way to save our pension. Before I start I want to say no one ever stole our pension money. Our pension money comes from the property tax levy and goes directly into our pen- sion fund. There is no opportunity for the city to divert the money for some other use. With that being said, the fund has made some bad invest- ments. There was a downturn in the economy. We are living longer. The city was not funding the pen- sion at the proper level and we have never increased the amount we contribute. Add to this the enhance- ments we have received over the years with no extra contributions
RECORDING SECRETARY’S REPORT
casino would bring approximately $300 million to our fund every year until we reach the 90 percent level. Needless to say with the budget stalemate in Springfield, the Governor will not sign any bill until he gets his turnaround agenda. The ARC is coming and there is very little chance the city will get a casino license this year, so the only alternative was for the Mayor to raise property taxes.
GREG BELLA
to pay for them.
Think about it – the fund was established to pay us 75 percent
Make no mistake – without the property tax increase and the casino pretty much dead this year, our pension fund will be insol- vent in the next 9 to 12 years. Without the property tax increase, the City would have been forced to lay off 2,000 law enforcement officers, 400 firefighters and other City employees would have been decimated. We are talking about garbage pickup every three weeks and forget about any other City services. To give you an idea of the cost, our pension fund writes checks totaling $55 million every month and the fund has already sold $200 million in assets to cover the checks. We will all bitch about the property tax increase but it guarantees a pension for our working officers and continued checks for our retirees. We will keep working with the City for a casino license because that, along with the property tax increase, will get us to proper funding that much quicker.
when you retired at 65 years of age and there was no pension for widows. After retirement officers only collected checks for an aver- age of 18 months before passing. The fund was very healthy. Now we are victims of our own success. Widows receive a 50-percent pension, minor children receive payments. All disability payments are paid by the fund. You can retire at 50 years of age with 20 years of service, and you now get to a 75-percent pension at 29 years and a day service instead of 34 years and a day.
These are enhancements with no enhanced payment by the city to pay for these benefits. There was never any change in the multiplier that requires the city to pay 2:1 – we contribute 9 percent of salary and the city pays 18 percent. The actuaries who forecast the future of the fund reported the city should be paying a 6:1 contribution to keep the fund healthy. The city was not required by law to contribute any more than the 2:1 multiplier.
We have hired the Center for Tax and Budget Accountability to file a Freedom of Information Act request with the City regarding Tax Increment Financing (TIF) funds and find out how much money is actually hidden there. This group brings us Ralph Matire, whoyouseeasaguestspeakeronWTTWChicagoTonightalmost weekly discussing how to fund our pensions. We also get the serv- ices of Vasyl Markus, another budget expert who worked for the State Budget Office and the Speaker. They will help us get the ded- icated funding to pay for your protected benefits. They will also be available to visit town hall meetings and explain to everyone the problem as well as the solutions. We will leave no rock unturned in permanently fixing our pension fund.
Retiree health care
In 2010 the FOP was able to convince the Legislature to change the contributions from a multiplier to an Actuary Required Con- tribution (ARC), which makes sure over a 30-year timeline the fund is at 90 percent funded with the first payment of $480 million due in 2016. If the city does not make the required payments, the City Comptroller can ask the State to divert the City’s state grant money into our pension fund. Needless to say with the current impasse in Springfield, that money would be minimal. The Legis- lators knew there would be tremendous pressure on the City to make the payments, but they felt this would bring them to the table to find a permanent solution.
I want to thank all the retirees who attended the final arguments at the Daley Center on retiree health care at the Daley Center. The FOP provided a bus to the hearing and the courtroom was stand- ing room only. The City and pension fund attorneys argued that they have no obligation to pay for retiree health care. The Judge asked why the statute says the City “shall” provide retirees with health care. Clint Krislov argued on behalf of retirees and ham- mered away at the Kanerva decision, where the Illinois Supreme Court ruled State employee retiree health care is protected as part of your pension by the Constitution. I talked with the attorneys after the hearing and all are in agreement on one point – this case will be decided by the Illinois State Supreme Court. The Judge will issue a written ruling on Dec. 11 and the decision will be posted on the FOP website. If we win the City will appeal, and if we lose, we will appeal.
The Daley administration instituted a two-tired pension system for new hires but never took the steps to meet the ARC. With Daley not seeking re-election, he just kicked the can down the road for the next administration to deal with. This is how we got to where we are – a pension crisis.
The City met with the FOP in early 2015 to ask for help passing legislation that would give Chicago a casino license and the profits would be 100 percent dedicated to the Police and Fire pension funds. A casino license will allow for a temporary casino to operate until a permanent one is built, which will take two or more years. The City also asked for help passing Bill 777, which would create a ramp to the ARC. This bill would lessen the yearly payment and extend the years to reach the 90 percent funding level. This bill would in no way lessen the total monies paid to the fund and would not take effect if the casino bill is not passed. The two bills are tied together – one does not work without the other. The
I want to wish everyone a safe and Merry Christmas.
Raising the property tax was not an easy thing to do. We saw impassioned speeches for and against it by Aldermen, and there will be political fallout, but it was the only way to save the pension funds. So before you make a hero or a scapegoat out of an Alder- man for the way he/she voted, ask yourself, “Did he vote to pre- serve our promised benefit or did he vote to get re-elected?”
CHICAGO LODGE 7 ■ DECEMBER 2015 11