(The Center Square) – Local officials are urging Illinois state government to assist in addressing local pension deficits.
Chicago owes nearly $34 billion in unfunded pension liabilities for public safety workers like police, firefighters and other city positions.
Chicago Mayor Lori Lightfoot spoke at the City Club of Chicago last week and discussed what she characterized as the city’s strides in devoting tax dollars to pay down their pension debt. Lightfoot said the city has paid $1.4 billion to the pension system during her four years as mayor.
"We believe in ourselves, and more importantly, we believe in Chicago, and we are proving it," Lightfoot said. "We have paid down our debts for pension by $1.3 billion in the last four years."
The city budget includes $242 million in taxpayer funding for payments into the city’s pension system, which Lightfoot said is necessary.
"There are over 100,000 city workers who are either active, retirees or beneficiaries that depend on the city’s pensions," Lightfoot said. "I believe pensions are a promise, and we need to make sure we step up and do the right thing."
Springfield Budget Director Bill McCarty said local unfunded pension liabilities should be a high priority for the state.
"We have been talking about pension from day one," McCarty told WMAY. "That is the single biggest driver of our expense and concern, now and into the future."
McCarty said if the unfunded pension liabilities continue to grow, local governments may need to reduce services for taxpayers.
"We would have to take from things that fund police or public works and fire. We have to take from that area, and that’s a big concern that we are going to be sacrificing potentially or cannibalizing city services just to make our required pension payments," McCarty said.
In 1994, former Illinois Gov. Jim Edgar implemented a pension ramp that would increase local pensions funding year to year until 2040. McCarty said there are talks about extending the ramp, which could lower payments in the long run, but pushed back against that idea.
"My recommendation to [Springfield City Council] there would be to keep flat, at the very least, the level we are at now, even though we can pay millions less, so that we can flatten that curve, get it paid down more quickly, pay less interest," McCarty said. "It is kind of like having a 30-year mortgage but paying on it like it is a 20-year mortgage."