Mayor Rahm Emanuel laid out a multi-pronged plan on Wednesday to tackle Chicago?s huge pension burden, urging the city council to approve the issuance of $10 billion of bonds to boost funding for the city?s four retirement systems.
Emanuel, who leaves office in May after declining to run for a third term as mayor, also called for changing the Illinois Constitution and earmarking new revenue from a possible casino and legalized marijuana for pensions.
?Issuing these bonds and depositing the proceeds directly into our pension funds would immediately increase the health of our pension funds to levels not seen in at least a decade before asking more of Chicago?s hard-pressed taxpayers,? the mayor said in a speech to the city council.
Chicago?s big unfunded pension liability, which stood at $27.6 billion in 2017, along with years of structural budget deficits, led to downgrades of the city?s general obligation credit ratings and higher borrowing costs.
Even after raising fees and taxes in recent years to save the retirement funds from becoming insolvent, the third-largest U.S. city faces pension contributions that will grow to $2.13 billion in 2023 from $1.02 billion this year.
With the bond proceeds, the retirement systems? low funded ratio of just 26 percent would jump to 50 percent, while city contributions to the funds would decline, saving taxpayers nearly $7 billion over 50 years, Emanuel said.
Emanuel introduced an ordinance to securitize state-collected revenue due the city, including income taxes, to back $7.7 billion of the debt, which would be issued through a new Dedicated Tax Securitization Corporation.
Chicago has already employed a similar bond structure to refund low-rated outstanding debt through a securitization of sales tax revenue with a statutory lien for investors that resulted in higher credit ratings and lower borrowing costs.
The remaining $2.3 billion of bonds would be backed by a water and sewer excise tax enacted in 2016 for the city?s municipal retirement fund.
An economic adviser to Emanuel first introduced the idea of the bond plan at a city investors? conference in August. However, the plan was put on hold earlier this fall in the wake of Emanuel?s September decision not to run again and surging interest rates.
12-12-2018 - Vidéo