A looming pension crisis in Chicago is testing Windy City Democratic Mayor Rahm Emanuel, according to The Wall Street Journal.
The city’s crumbling pension system stands to make Chicago insolvent. In March, Moody’s Investors Service gave the city a "negative outlook" and downgraded its credit rating – following a triple downgrade in 2013 – landing it just three levels above junk bond status, according to the Chicago Tribune
Chicago is now the lowest-rated major city in the country, with the exception of bankrupt Detroit, Crain's Chicago Business reported.
With just one-third of the amount needed to pay promised benefits to city workers, Emanuel is scrambling to find the money. His plan: Raise property taxes by $250 million and shrink retirement benefits for most city workers and retirees, according to the Journal.
Even with the tax increase, city workers would be asked to make sacrifices, such as paying more for their benefits, while retirees would see reduced cost-of-living increases.
The tax increase proposal does nothing to address a $600 million shortfall to fund police and firefighter pensions in 2016, which is required by state law. Negotiating with the unions for those groups is expected to be tough, the Journal reported.
During his campaign and throughout his term, Emanuel has touted his bravado, saying he’s not afraid to tackle tough issues.
"The voters did not elect me to think about my political future; they elected me to think about Chicago's future," he said in a statement to the Journal.
But his decisions as mayor have not resonated well with voters, according to the results of a Chicago Sun-Times poll
published Saturday. Just 29 percent of likely voters said they would support Emanuel if the election was held today.
Illinois Gov. Pat Quinn, a fellow Democrat whose support is needed to make the plan happen, is not keen on Emanuel’s property tax hike proposal, telling the Chicago Tribune last month that he won’t support a tax gouge on property owners.
Emanuel has "got to come up with a much better comprehensive approach to deal with this issue," Quinn said.
According to The New York Times
, by 2019, employees would be contributing 11 percent of their salaries to pensions – compared to the current 8.5 percent – while cost-of-living increases would drop or even be skipped in some years.
Emanuel’s popularity has tanked since routing political rivals with 55 percent of the vote in 2011, according to The Huffington Post
. Last year, just 2 percent of Chicagoans strongly supported his job performance. Voters will go to the polls in February.
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