Committee on Finance City Council Meeting October 7, 2020
Resolution Calling for Subject-Matter Hearings on Pension Obligation Bonds
WHEREAS, in addition to the reported COVID-19 budget shortfalls, the City of Chicago ("the City") faces projected pension payment increases of more than $500 million between the 2021 and 2023 budgets; and
WHEREAS, the City's Historic and Projected Pension Contributions in the 2021 Budget Forecast projects an increase of more than $130 million in 2021; an increase of more than $400 million in 2022; and an increase of approximately $50 million in 2023 (2021 Budget Forecast, page 28); and
WHEREAS, the City owes more than $31 billion to its four employee pensions, and its pension debt increased by approximately $1.7 billion in 2019, according to WTTW reporting on the 2019 Certified Annual Financial Report; and
WHEREAS, Forbes and Wall Street Journal reported that the City's funded ratio of its pension is 24% (Elizabeth Bauer, Forbes, August 31, 2020); and
WHEREAS, addressing the three-year pension ramp requires structural reforms to the budget; and
WHEREAS, Pension Obligation Bonds are a tool that allows the City to issue bonds targeted to expand the funded ratio of the pensions, refinancing the existing pension debt to reduce the pension payment ramp; and
WHEREAS, if the City does not find additional revenue or refinancing sources for its budget, a large property tax increase will be necessary for the City to meet its obligations; and
WHEREAS, issuing Pension Obligation Bonds and lowering the pension payment ramp reduces the likelihood that a large property tax increase will be needed, making targeted Pension Obligation Bonds a responsible, progressive structural reform for the budget; now, therefore,
BE IT RESOLVED, that we, the Members ofthe City Council ofthe City of Chicago, hereby call upon the Committee on Finance to hold subject-matter hearings on the potential issuance of one or more Pension Obligation Bonds specifically...
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