You may not know it, but Chicago is teetering on the brink of financial ruin. Its coffers bled dry by a staggering debt that ranks second only to New York City. That debt is largely driven by the iron grip of powerful unions that have long dictated the city’s political pulse. Now, lawmakers face an urgent challenge: how to rescue the Windy City from collapsing under the weight of its own fiscal promises. Lisa Fletcher reports.

The following is a transcript of a report from “Full Measure with Sharyl Attkisson.”
Watch the video by clicking the link at the end of the page.

Stage Announcer: Put your hands up in the air! Make some noise for Brandon Johnson.

When Brandon Johnson won the Chicago mayor’s race, most of his donations came from organized labor, half from the teachers union where he once worked.

Mayor Brandon Johnson: Make no mistake about it, Chicago is a union town.

Unions have long played a strong role in Chicago politics. And they get political payback from those they help elect. But critics say that dynamic adds to a crisis that’s bankrupting the city.

Today, 80% of property taxes paid by Chicago residents are allocated to retirement funds, pensions, for public workers, including police officers and firefighters, and even that amount falls short of what’s needed.

When unions negotiate higher salaries and better benefits, it boosts the pensions they’re promised later. But Chicago doesn’t have the money to cover those future costs, so the pension funds run short. It’s like promising a big retirement bonus without putting enough cash aside to pay for it.

Ted Dabrowski: The Chicago Teachers Union is a huge problem for Chicago. They strike every two to four years. They make huge demands. They tend to win.

Ted Dabrowski is president of Wirepoints, a Chicago-based non-profit pushing for an overhaul of how public union pensions are funded.

Ted Dabrowski: They’re not taking the taxpayer money to put it into the pension funds, but what they have been doing is giving it to the workers to get even bigger salaries, which makes even bigger pensions. So the hole keeps getting bigger. They keep giving out more benefits in order to buy off the unions and get votes. So you’ve got this kind of marriage between the politicians and the unions to take care of each other, and it’s the ordinary people who are left out having to pay bigger and bigger taxes.

Right now, Chicago’s pension funds are a shocking $53 billion short. That equates to about $45,000 per household of debt.

To help fix the shortfall, the city has doubled property taxes over the past ten years. But that hasn’t done more than stop the bleeding.

Chief Financial Officer Jill Jaworski: This is the amount we need just to tread water, so things don’t get worse.

For now, says Dabrowski, the city’s only plan is to squeeze Chicago’s taxpayers at every turn.

Ted Dabrowski: What you end up with now in Chicago is you got these red light cameras. Not only do they slow people down, but they also raise a lot of money. There’s a dollar fee on every tire you buy. Bottled water, they have fees on everything because that’s the way the city has been trying to raise money, effectively nickel and dime you. They’re finding money, but it’s not real.

In other words, Chicago is finding money, but not any real fix to the larger problem of unions and pensions.

Ted Dabrowski: If the pension funds ran out of money, then they’re going to have to take money from the budget, which means away from crime, away from policing, away from schools and give it to the pension funds.

Dabrowski says the future of Chicago hinges on the ability to confront its financial challenges head-on.

Ted Dabrowski: Rather than letting politicians control the pension fund, give the money to the workers and let the workers manage their own accounts. So you call it a defined contribution or a 401k style account. We should let the workers control their own retirement funds. Why let the politicians continue to make a mess?

While the city struggles to balance its books, Chicago’s Board of Education has approved a new contract giving teachers a 20% raise over four years, which stands to add billions to the already underfunded pension system.

For Full Measure, I’m Lisa Fletcher.

Watch video here.