Chicago May Borrow Money To Cover Police Back Pay

CHICAGO, IL &#8211 Mayor Rahm Emanuel may borrow more money to come up with the $65 million or so the city will need to cover police back pay if a newly proposed contract is approved, the city’s top budget official said Tuesday.

Budget Director Alexandra Holt did not say how much the city will need to borrow, but indicated it would be a short-term loan paid back by mid-2017, when the new police contract would expire.

That’s in contrast to the long-term borrowing done to pay for such costs under former Mayor Richard M. Daley. The last time the city had to come up with back pay for police and fire contracts, Daley took out a $240 million loan of at least 25 years.

Daley’s borrowing for day-to-day expenses like back pay covered the last police and fire contracts, which ran from 2007 to mid-2012. The new deal, negotiated under Emanuel, would cover July 2012 through mid-2017.

Under the new contract proposal, officers would get increases totaling 11 percent over five years, including retroactive wage increases of 2 percent on July 1, 2012, and another 2 percent on Jan. 1, 2013, but not for overtime worked from July 2012 to June 2013.

On Tuesday, Holt said the Emanuel administration has set aside some money to pay the police back pay, but may need to borrow an unspecified portion. The administration has said the city has enough money to pay about $28 million in back pay for firefighters, EMTs and other emergency medical personnel. The firefighters also got 11 percent raises over five years.

Holt said Emanuel’s “approach to financial management is that we don’t borrow long term to pay off operating costs.”

Last year, however, the Tribune’s “Broken Bonds” series revealed how city leaders have used long-term borrowing to paper over budget shortfalls and push current costs onto future generations — all with little input from taxpayers or oversight from aldermen. Some of that borrowing has occurred under Emanuel.

Earlier this year, the city borrowed more than $883 million to pay bills and maintain services, a strategy that will cost taxpayers down the road but allowed Emanuel to put off some difficult choices leading up to his re-election campaign. Some of the bond issues were for as long as 30 years.

Although budget watchdogs were critical of the borrowing, they have given Emanuel credit for bringing down costs, finding steady ways to bring in city revenue not resorting to one-time revenue sources to pay for operating costs — like Daley’s long-term lease of city parking meters.

The police contract must be approved by both the Fraternal Order of Police and the City Council. Police union leadership has agreed to the contract, but it now goes before more than 10,000 rank-and-file members in balloting that will take several weeks. If it’s ratified, the city then has 75 days to cover the back pay, said Holt, who added that funds could come from this year’s budget and next year’s spending plan.

From The Chicago Tribune

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