Chicago Mayor Rahm Emanuel’s plan to shore up the city’s municipal pension fund calls for a new water and sewer tax.
The water and sewer tax of 28 percent would be phased in over four years and generate $239 million annually when fully implemented.
After the phase-in period is complete, the tax would cost the average homeowner an extra $226 annually.
The city would use the revenue to stabilize the municipal pension fund, which covers some 71,000 workers and retirees and has $18.6 billion in unfunded liabilities. The mayor’s plan seeks to have the pension fund 90 percent funded by 2057.
The mayor intends to seek the City Council’s approval for the tax plan next month.
Aldermen are being asked to consider the new tax after approving various tax hikes, including a record property tax increase last year, to address the unfunded liabilities in the city’s police, firefighters and laborers pensions funds.
Emanuel’s proposed overhaul of the municipal pension fund includes additional components.
Workers hired after January 1, 2017 would have to contribute 11.5 percent of their salary toward their pension, up from 8.5 percent.
Employees hired from 2011 through 2016 could also choose to contribute 11.5 percent of their salary toward their pension funds, giving them the ability to retire at the age of 65.
Nothing would change for workers hired prior to 2011.
The state legislature will have to approve the changes to pension contributions.