Chicago Mayor Rahm Emanuel this week released an actuarial report on his proposal to raise the city’s water and sewer tax and use the revenue to fund the city’s pension funds.
Emanuel is trying to prove to lawmakers that the windfall of new revenue from the tax will be sufficient to improve pension funding.
But some lawmakers are peeved that Emanuel waited so long to produce the hard numbers.
From the Chicago-Sun Times:
On the eve of a crucial Finance Committee vote, Mayor Rahm Emanuel released an actuarial analysis in hopes of proving to aldermen that his 29.5 percent tax on water and sewer bills will be enough to save the largest of Chicago’s four city employee pension funds.
It didn’t work with the anti-Emanuel Progressive Caucus that demanded the study of the mayor’s plan for the Municipal Employees Pension Fund weeks ago and was miffed about getting it hours before the vote.
“The numbers just don’t add up . . . In 2023, there will be a pretty huge gap. There’ll have to be some other source to pay for that gap,” said Ald. Scott Waguespack (32nd).
Civic Federation President Laurence Msall said the analysis shows that the infusion of $1 billion in new revenue from the new utility tax by 2023 will put the city’s largest pension fund in a “significantly better place.”
But Msall noted that even with that windfall — and continued contributions from property taxes, the corporate fund and enterprise funds that support operations of O’Hare and Midway Airports as well as the city’s water and sewer systems — the condition of the pension fund will continue to drop over the next five years with “more benefits going out than coming in.”
City CFO Carol Brown defended the proposal:
Budget Director Alex Holt and Chief Financial Officer Carole Brown acknowledged that increased funding will be needed after the “ramp-up” to a so-called “actuarially required contribution.”
Noting that the 29.5 percent tax on water and sewer bills would be phased in, Holt said, “It’s the growth over four years that gets us to the ramp. At the end of that period, there will need to be further savings or further revenue to fund the ongoing increase. There is room for further increasing the water-sewer tax. But there are other possibilities as well. The mayor has been big on further benefit reforms. Those may produce future savings. There are other options as well. Going from contributing $1 billion in six years to $3 billion in six years should help investment returns and allow them to not have to spend so much of their assets on benefits.”