Tuesday’s passage of pension reform in Illinois and the federal ruling on Detroit’s pensions in bankruptcy court have heightened Chicago’s municipal pension emergency. State law demands that the Windy City must increase contributions to public employee pensions by $590 million in 2015, totaling $1.5 billion. If a deal to lower that figure isn’t reached by this time next year, Chicago could be forced to hike property taxes by as much as 70 percent, cut vital city services, or both. The NYT reports on the prospects for a deal in the wake of Tuesday’s big pension stories:
But city officials are hoping there is now momentum on their side to force a compromise solution. They come armed not only with Tuesday’s state vote but also with a federal judge’s ruling, also on Tuesday, to formally send Detroit into bankruptcy. Chicago is not facing bankruptcy, but the Detroit case produced a development being watched closely by cities and unions across the country: It explicitly permitted changes to public pension funds to help the city shed its debts and reorganize.
Illinois is not Michigan and Chicago is not bankrupt, so Tuesday’s federal ruling on Detroit’s pensions hasn’t necessarily set a clear precedent that Chicago’s officials can wield against the unions in court. But the momentum does seem to be on the side of city officials finally drumming up the political will to reform pensions.2013 has been a big turning point for organized labor in America. With the publicity the country’s pension crisis is finally getting, and with additional union losses in court rulings, blue officials seems to be gaining the confidence to make state and city fiscal decisions independent of union demands. If the political party through which unions exert their power starts to cut union member benefits with the blessing of the courts, then big labor in America is in for a significant neutering.It’s too early to tell what precedent this week’s pension stories will set (if any), but the possibility looms for unions that the tides are turning against them. Chicago looks to be one of 2014’s biggest battlegrounds.