In his annual budget address last week, Chicago Mayor Rahm Emanuel launched a campaign attacking the pensions of teachers and other public sector workers. In the speech, he threatened that property taxes would have to rise 150% if pensions were not reigned in, as pension costs would soon eat up 22% of the city’s budget, the WSWS reported this week.
Emanuel did not release any concrete details about the plan, but his Roadmap to Retirement Security, released in May, included a ten-year freeze on cost of living increases, a 5% increase in employee contributions, a five-year increase in the retirement age, the imposition of private plans (like 401Ks) for new hires, and no increase in the city’s contributions until the system is “reformed.”
Illinois state legislators are in agreement that pension costs must be slashed, but have been unable to enact any changes due to political fighting and maneuvering. The Democrats want to transfer financial responsibility to local school districts, something Emanuel has supported since Chicago is currently the only city that funds its own teachers’ pensions (the Chicago Teachers’ Pension Fund). Thus, Chicago taxpayers currently pay twice, once for their local teachers’ pension fund and again, through state taxes, toward the state fund.
Republicans oppose this plan because it would shift the burden to suburban and rural districts, many of which they control. According to the Illinois Policy Institute, shifting the pension costs onto the districts would increase their expenditures by 3.7%. This could lead to massive spending cuts, which would likely result in layoffs, increased class sizes, reduced course offerings and other cutbacks that directly affect children.
Emanuel’s plan is part of a larger national movement to impose austerity on working people by increasing their share of the tax burden and decreasing the services and benefits they receive in return. Illinois is one of the battleground states for this movement. The credit ratings agencies have given the state the 2nd lowest rating in the U.S. (after California) and have demanded pension “reforms” as a necessary step toward restoring their credit rating. According to the WSWS, the Chicago Board of Education also had its credit rating lowered because of pension costs.