Chicago will make full advance $260M pension payment: mayor

Chicago will move ahead with its full $260 million supplemental pension payment, Mayor Brandon Johnson promised the city’s investors Thursday.

Johnson pledged to make the payment — aimed at chipping away at the city’s towering unfunded pension liabilities — during the Chicago Investor Conference. But as he argued City Hall “cannot simply cut our way out” of its fiscal woes, he did not reveal what new taxes or fees he will propose to balance the city’s next budget.

“Let me say that one more time: I want to reassure this audience that the city will make the second budgeted supplemental pension payment this year,” he told the investor crowd. “Because of property tax delays from the county, it’s a question of when, not if.”

The pledge adds another, and possibly final, chapter to the saga of the $260 million payment, which has become a key source of contention between Johnson and the City Council.

The mayor’s initial budget proposal last October recommended a smaller $121 million payment, but aldermen argued that amount was insufficient for the city’s troubled pension funds and warned that the smaller sum could trigger a credit downgrade. Johnson opponents ultimately passed a budget against the mayor’s wishes that included the full payment.

Johnson announced in January that his administration had made only half the payment, while promising to pay the remaining $130 million later in the year.

The move led aldermen to question whether the mayor would skirt the budget they had passed. Ald. Samantha Nugent, 39th, even pushed for a referendum asking city voters whether Chicago should make its pension contributions in the first quarter of every year, though that proposal has since stalled.

In a statement on Thursday, Nugent said the mayor fought the aldermanic effort to include the advance pension payment in the budget.

“Making the payment seven months late isn’t a celebration — it’s a reminder that it took sustained pressure from our coalition to move him to action,” Nugent said. “That’s not leadership. It’s catch-up.”

Last month, top city budget officials told aldermen they were analyzing when and how much they could pay the remaining sum amid a delay in property tax payments to the city from Cook County. The payments are handled by Treasurer Maria Pappas’ office.

With Thursday’s announcement, Johnson aimed to put the question to rest.

“We’re able to do all this because we had the vision, but we also had the right elements: responsible fiscal stewardship, long-term financial planning and a wealth of talented and dedicated public servants to carry out both,” he said.

Brendan White, the city’s acting chief financial officer, said the city split the advance payment first made by former Mayor Lori Lightfoot’s administration because the money now comes from the city’s normal operating budget. It had previously been paid using cash on hand at the start of each year, he said.

The advance payments “can really bend the curve” for the city’s pension funds and stave off “catastrophic” damage in the event of an economic downturn, White said. He claimed that $1 spent today is worth $3 in the future.

“We always budgeted for this,” he said. “We’re continuing to stick to financial best practices and do whatever it takes to secure the long-term financial strength of the city.”

Johnson’s administration took the rare step of not inviting journalists to last year’s annual conference, but allowed members of the press to attend the mayor’s speech this year.

As he spoke late Thursday afternoon, Johnson did not signal what he might propose when he presents the city’s next budget in October. He again championed his efforts to add or raise taxes on cloud computing software, social media companies and sports gambling.

The policies, several of which face legal challenges, show what works, he said.

“Structural, progressive revenues that help ensure the benefits of growth are shared with working people,” he said. “Because when our local governments have more to invest in our residents, our businesses benefit, our neighborhoods benefit and our entire economy grows stronger.”