Pension Bill May Deepen Chicago's Budget Deficit

As Chicago faces a budget deficit nearing $1 billion, a bill awaiting Illinois Governor JB Pritzker’s signature may worsen the city’s financial outlook.

At the core of the issue is a proposal to increase pension benefits for certain retired police officers and firefighters.

Referred to as a “pension sweetener,” the bill passed through the legislature at the end of the spring session with minimal public debate.

The legislation would raise pension benefits for officers and firefighters hired after 2010 by increasing both the cap on pensionable salary and the annual cost-of-living adjustment.

Fiscal analysts project that Chicago taxpayers would be responsible for $60 million in 2027 and $754 million by 2055 to fund the changes.

“We’re still evaluating the bill. Obviously, there is a lot to consider here,” Pritzker said on Tuesday.

The presidents of the Civic Committee and Commercial Club of Chicago, the Civic Federation, and the Better Government Association have called on the governor to veto the bill. In a published statement, they wrote: “Chicago and Illinois have among the most underfunded pension systems in the entire country. Taxpayers are on the hook for a combined state and local pension tab of $459 billion, or more than $90,000 per household.”

“One thing to consider is the finances of the city of Chicago; how will they pay for it? Another thing to consider is these are our policemen, these are our first responders, and we want to make sure that they’re well taken care of,” Pritzker added.

With a budget shortfall close to $1 billion, the bill places Chicago Mayor Brandon Johnson in a challenging position. Johnson, a former union organizer turned elected official, stated that he supports better compensation for fire responders but acknowledged the city lacks sufficient funding.

“I’ve spoken to the legislature about my concerns about this particular bill,” Johnson said. “He’s what should or could still happen is that in our effort to secure retirement for our public employees, which is critical and constitutional, absent progressive review, it’s impossible to sustain that expectation.”

If signed into law by Pritzker, the pension bill could lead Tier 2 workers in other parts of Illinois to request similar adjustments. Broader pension reform efforts stalled during the spring session in Springfield.