Updated 04/01/14 – 2:08 p.m.
CHICAGO (CBS) — Mayor Rahm Emanuel has proposed raising property taxes by $250 million over five years as part of a pension reform plan that also would require city workers to pay more toward their pensions.
The plan would only start digging the city out of its massive pension debt, and would not address pension shortfalls for police, firefighter, and teacher pensions. It also would not affect a looming $600 million increase in police and fire payments due next year.
That means more tax hikes or service cuts could be needed to address those debts.
The mayor already has asked lawmakers to delay the increased payment for police and fire pensions until 2022, while the city seeks major changes to its pension systems.
According to published reports, the mayor’s plan would raise the city’s property tax levy by $50 million a year for five years, starting in 2016. For the owner of a $250,000 home, who has a current property tax bill of $4,000 a year, taxes would go up $58 a year – or $290 over the five-year term of the tax hike.
Retired workers’ annual pension contributions would rise half a percent a year starting next year. The current pension contribution of 8.5 percent of a worker’s salary would grow to 11 percent by 2019. For employees who make $60,000 a year, they would be paying $1,500 more a year toward their pension by 2019.
Workers would also see changes to cost-of-living increases in their pensions. Instead of annual 3 percent compounded bumps in pension benefits, retirees would get annual increases of 3 percent on their original benefit when they retired, or 50 percent of the consumer price index, whichever is lower.
They also would have to wait two years, rather than one, for those pension bumps to start after retiring.