CHICAGO, April 1 (Reuters) - Facing a growing pension funding problem, Chicago Mayor Rahm Emanuel proposed raising property taxes and reducing retiree benefits for some city workers, according to local newspaper reports on Tuesday.
Under the plan, the city would collect $250 million more in property taxes over five years while city workers’ pension contributions would rise by 2.5 percent over five years. Automatic 3 percent compounded cost-of-living pension increases would instead be tied to inflation and skipped in certain years.
The move is aimed at eliminating about half of Chicago’s $19.5 billion pension funding shortfall over 40 years, the Chicago Tribune reported.
The mayor will also ask the Illinois Legislature to delay until 2023 a looming $600 million state-mandated payment to two of the city’s four retirement systems, the Chicago Sun-Times reported.
A spokeswoman for Emanuel did not immediately respond to a request for comment on the reports.
Last month, Moody’s Investors Service dropped Chicago’s credit rating one notch to Baa1, citing a massive and growing pension liability that remains a threat to the city’s fiscal solvency. Prior to that downgrade, Moody’s slashed Chicago’s rating three notches in July.
Reporting By Karen Pierog; Editing by Dan Grebler