Sen. Robert Martwick’s bills to significantly boost “Tier 2” pension benefits for Chicago firefighters appeared this month to be on the fast track to Pritzker’s desk, facing only tepid resistance in the legislature.
Then, last week, Martwick got a phone call from Chicago Mayor Brandon Johnson.
“He said he just needed some time to get his financial team in place and wrap their heads around the issue,” Martwick said in an interview late Friday. “He asked for a temporary hold, and so that’s what happened.”
Martwick’s legislation was backed by the union representing city firefighters, who said the pension “fix” for workers who have started since 2011 will aid recruitment and head off worries that retirement benefits would be so weak that they run afoul of federal law. Officials in former Mayor Lori Lightfoot’s administration opposed the bills, claiming they would add $55 million to the city’s annual pension contribution burden, but Mayor Brandon Johnson’s administration never took a public stance on the legislation.
On Friday, Johnson announced the formation of a “working group to address Chicago’s municipal pension systems.” He did not name any members of the group but said it would include city finance officials, state legislators and union leaders.
Martwick said he expects to be a member of the working group, along with “real pension experts who don’t have a dog in the fight.”
“It’s going to be important for us first to be completely honest and transparent about the nature of the debt” the depleted pension funds are facing, the Northwest Side senator said. “The goal is to acknowledge the whole problem, lay all our tools on the table and develop a plan.”
Johnson is hardly the first mayor to promise big action on the city’s pensions. Mayor Rahm Emanuel developed a plan to cut pension benefits until it was struck down by the Illinois Supreme Court in 2015. And Mayor Lori Lightfoot beseeched state lawmakers with broad calls for “pension reform,” including at one point floating a state takeover of the funds.
However, instead of calling for cuts or structural reform, Johnson pledged in his statement to “find workable solutions with sustainable funding sources” to replenish the funds.
Martwick introduced a companion legislative package boosting pension benefits for Chicago police officers, but it did not advance this session.
In a YouTube video on Friday, Chicago Fraternal Order of Police president John Catanzara said he’s begun talks with the Johnson Administration about “a much broader repair to the pension issues that we’re facing, so we’re not going to keep piece-mealing these little bills together, Assembly after Assembly.”
“We’re going to try and get it all done in the veto session and have some at least pension clarity for the future, not only for our sake, but for the new administration,” Catanzara said.
Separate legislation Martwick proposed on behalf of Cook County Board President Toni Preckwinkle to boost retirement benefits for county employees did make the cut after its language was hitched to a separate bill that passed the General Assembly on Thursday. The bill also codifies into state law the county’s existing pension funding schedule, which got a boost from a controversial 2015 sales tax hike.
The bill “will ensure Cook County beneficiaries will receive their fair share when they reach retirement,” Preckwinkle said in a news conference on Thursday.
A provision of the bill that would have given Preckwinkle two additional appointments to the county’s pension board of directors was stripped from the legislative language amid pushback.
On a separate track, Rep, Stephanie Kifowit (D-Oswego), who chairs the House Personnel & Pensions Committee, filed a flurry of new bills this month aimed at starting a conversation on significant reforms to the state’s five pension funds.
Affordable housing tax credit stumbles
As legislators looked to shave new spending from the 2023-24 budget, a long-brewing proposal to create a permanent new $35 million state-sourced affordable housing tax credit once again fell short this year.
But affordable housing developers were not entirely frozen out of the budget. The Illinois Housing Council celebrated the budget’s inclusion of a nearly $139 million one-time appropriations for developments already using the federal Low-Income Housing Tax Credit.
“These funds will help fill financing gaps on affordable housing developments that are facing increased costs due to rising interest rates, inflation on construction costs and other financing challenges,” Illinois Housing Council executive director Allison Clements wrote in a statement Friday. “Although not in the form of a tax credit, the funding will play a similar role to what the proposed Build Illinois Homes State Tax Credit would have done, at least in the short-term.”
She added that her organization will continue to fight for its proposed permanent tax credit program, called the BUILD Illinois Tax Credit, in future legislative sessions.
“We still believe there is a need for a permanent funding source for affordable housing development,” Clements said.
Delinquent property reform passes
Cook County Treasurer Maria Pappas earlier this year rolled out two bill proposals to reform the Cook County Annual Tax Sale, whereby the county treasurer’s office lets investors bid for the right to pay the property taxes for tens of thousands of delinquent homeowners and then charge the homeowners penalties with interest.
The bills were derived from a small research team Pappas recruited in 2021 to help her office develop policy. The group of former investigative reporters issued a report that linked property tax delinquency to the legacy of redlining and other racist government-sponsored housing practices in the early 20th Century. They followed up with another report showing that investors have widely abused the “sale-in-error” system that lets them claim refunds on tax bills they bought.
Her office worked with Sen. Ram Villivalam (D-Chicago) earlier this year to roll out a bill proposing to halve the penalty for late taxes from 1.5% to 0.75% for every month the bills go unpaid. A companion bill closes loopholes in “sale-in-error” rules in an attempt to crack down on rogue tax buyers.
Both pieces of legislation were rolled into an amendment and tacked onto a separate property tax-related bill that cleared both chambers last week.
In a written statement, Pappas called the effort “the most significant property tax reform legislation the General Assembly has approved in decades.” She estimated that the lowered interest rates could collectively save struggling homeowners up to $35 million per year, and she said the “sale-in-error” legislation will close loopholes that let “hedge funds and private equity firms … profit at the expense of lower-income Black and Latino communities.”
“This will help stop the draining of generational wealth from minority families and help small businesses stay afloat,” Pappas wrote. “The county will be able to more efficiently put vacant and abandoned properties back to productive use.”
A separate proposal championed by Neighborhood Housing Services of Chicago to convene a task force to explore allowing payment of property taxes in installments also cleared the legislature.
A bill put forward by the Chicago Bar Association to hike interest penalties as a way to feed Cook County’s cash-starved indemnity fund did not advance this session.
Editor’s note: A housing advocacy group, the Illinois Housing Council, was previously misidentified in the story, and the error has been corrected.
