Pritzker's signature on police pension bill adds pressure for state bailout and city property tax hike
Gov. JB Pritzker’s decision to sign a pension sweetener for Chicago police officers hired after 2010 will turn up the heat on a reluctant City Council to raise property taxes — and on the Illinois General Assembly to bail the city out of an even deeper financial hole.
On Friday night, while most Chicagoans were focused on plans for a weekend of spectacular summer weather, Pritzker signed a bill that Mayor Brandon Johnson’s administration claims would raise the city’s annual pension contribution by $60 million in 2027 — and by $753 million in 2055.
The overall impact would make Chicago’s $35.9 billion pension crisis $11 billion worse.
Top mayoral aides have branded the bill an “unfunded mandate.” But senior mayoral adviser Jason Lee said Pritzker’s signature was not a surprise.
“We understand the position the governor was in,” Lee said, noting that the bill passed both houses unanimously. “We have to try to use it as, hopefully, a jump-off point for subsequent conversations as Springfield gets more comfortable with the idea of revenue in subsequent sessions.”
Civic Federation President Joe Ferguson scoffed at the notion that Pritzker’s signature on the pension bill was inevitable.
“Had the mayor declaratively said, 'This is not the moment for this,’ the governor would have been hard pressed to sign it,” Ferguson said. “Leaving the governor alone to do that, one would have hoped the governor’s evaluation — as a matter of policy and his appreciation of the centrality of Chicago and the economic engine that is Chicago at a constrained moment — would have brought him to a veto.”
Pritzker spokesman Alex Gough said the law brings “parity” to so-called Tier 2 benefits for Chicago police officers hired after 2010, providing those officers with the same benefits as their downstate counterparts. He called it “a proactive step to prevent more significant financial or legal issues in the future.”
“The governor … expects the city of Chicago to implement these changes with careful planning and fiscal discipline,” Gough said in a statement.
The law sweetens the pot for Tier 2 Chicago police officers in the same way that has already been done for Chicago firefighters and paramedics. It raises the annual salary cap used to determine pension benefits and boosts the annual increase that retirees receive.
The added pension burden is not happening in a vacuum.
Chicago is facing a $1.12 billion budget shortfall for 2026. The CTA, Metra and Pace face a $770 million mass transit funding shortfall. And the most immediate financial crisis is confronting Chicago Public Schools, which must find a way to erase a $734 million budget shortfall by the end of the month.
Matt Fabian, a partner at Municipal Market Analytics, said the converging crises raise “the odds for the state to help out.”
“Ultimately, the city’s budget situation is going to have to be fixed by the city and the state. And so the state, having just made it worse — even if it’s required under law — raises the potential for the state to help out the city at least in the near term,” Fabian said. “The state has the ability to raise taxes if it needs to. It can design new taxes. It could increase the income tax. It could find ways to extract more money."
Last year, Johnson broke his campaign promise to hold the line on property taxes, only to have an emboldened City Council unanimously reject his proposed $300 million property tax increase and refuse to raise property taxes by any amount.
Johnson has ruled out a property tax increase in his 2026 budget, well aware that it would be even more difficult to pass with just over a year to go before the aldermanic election.
But Fabian said the pension dilemma could leave the Council with no other choice.
“The property tax is going to have to be part of the solution. Maybe this head tax that the mayor is talking about, who knows? But aid from the state is going to have to be part of it too. Or some kind of relief from state mandates,” he said.
Fraternal Order of Police President John Catanzara said he did not care how the city handles the added pension burden.
“Figure it out. It’s not our problem. ... The benefit is earned and deserved,” he said.
The Chicago Police Pension Fund has assets to cover just 24.6% of its liabilities. That figure would drop to just 18% when the Tier 2 benefit is factored in.
“We would not be in a pension crisis if if were not for previous administrations that failed to pay the city’s fair share to begin with. ... That was not created by us," Catanzara said. "That was created by politicians. Let the politicians figure out the solution.”