City workers in Chicago take a hit

CHICAGO -- Illinois Gov. Pat Quinn on Monday signed into law a pension bill that will force some 57,000 of Chicago's city workers to pay roughly 29% more for their future retirement benefits while reducing benefits for retired workers.

The measure—which was backed by Chicago Mayor Rahm Emanuel—would help eliminate a $9.4 billion shortfall, but it put Quinn in a pickle.

The city under the legislation is also required to increase its yearly pension contributions by $250 million over the next five years. Emanuel had proposed to pay for the city's cut through a property tax increase.

Quinn, a Democrat who is in the midst of a tough reelection battle with Republican nominee Bruce Rauner, has campaigned on reducing Illinois residents' property tax burden.

The governor received a measure of political cover when he signed a bill last week that will help the city raise an estimated $50 million a year by nearly tripling emergency 911 fees that every landline and cell phone owner is required to pay.

The bill initially passed by the legislature included language that would have required the city to raise property taxes to help pay for the pension shortfall. But the final bill was stripped of the property tax provision at Quinn's insistence.

Rauner predicted that the added projected 911 fees won't be enough and that the city will inevitably raise property taxes.

"I would have vetoed this law – but Pat Quinn likes to raise taxes and left homeowners holding the bag again," Rauner said. "This should have been a no-brainer – veto the bill, don't squeeze Chicago families even more."

Quinn on Monday urged Emanuel, a fellow Democrat, and the city to look beyond property taxes to deal with the city's underfunded pension system.

"I strongly urge the mayor and City Council to follow our lead and identify a comprehensive, balanced solution to Chicago's pension crisis," Quinn said in a statement. "Chicago's finances can and should be set on the track to long-term stability in a way that does not hit homeowners hardest."

Quinn had been weighing since April whether to sign the pension bill — which calls for city workers to pay an average $1,500 more a year and will reduce cost-of-living increases for retired workers.

The bill almost certainly will face a legal challenge from employee unions that previously had challenged its constitutionality.