Chicago Casino Could Boost Pensions and Union

Hotel union backed Mayor Rahm Emanuel in run off

Rahm Emanuel / AP

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Mayor Rahm Emanuel of Chicago is pushing the Illinois state legislature to approve a city-owned casino to help shore up the city’s broken pension system, but critics fear that it could soon become a handout to union supporters.

Emanuel has petitioned lawmakers over the years to approve a Chicago casino as a means for generating revenue for the indebted city without raising property taxes.

However, some political observers in Illinois and nationally have concerns about the city-owned casino and the influence that labor groups have played in the mayor’s approach to the issue. One Chicago-based political player, who spoke on condition of anonymity, attributed the mayor’s support to the eleventh hour endorsement that Emanuel received from hotel union UNITE HERE.

"The mayor’s zeal for this casino grew after he received the UNITE HERE endorsement," he said.

Emanuel faced a tough reelection bid despite outspending his Democratic opponents; he was forced into a run-off election against Jesus Garcia, the liberal commissioner of Cook County. Part of Emanuel’s struggles was the massive drop in support from public-sector unions, who objected to his budget cuts and engaged in a mass strike when Emanuel attempted to enact education reforms.

UNITE HERE launched a "Rahm Love" campaign in March with ads and voter canvassing from organizers and members.

"We’re winning with Rahm," the union endorsement message said. "We have more union agreements since he became Mayor—the Marriott Marquis is just one example."

The union had more than 14,000 dues paying members in 2014, according to its most recent federal labor filings, a 17 percent increase from when Emanuel took office in 2011. The casino could be the union’s biggest catch yet. It is expected to create 4,000 jobs, which could represent a nearly 30 percent increase in membership if all those positions were unionized.

Assistant Majority Leader Daniel Burke, a Chicago Democrat, has advocated for expanding gambling in the city for more than two decades. He called the casino the "last hope" for the city to close the pension gap, which has ballooned to more than $19 billion, according to the Illinois Policy Institute.

"Rahm is certainly desperate for a resource … and the casino is probably the only reasonable source of new revenue," Burke said. "None of us want to raise property taxes."

Emanuel has found an unlikely ally in newly elected Gov. Bruce Rauner, who revealed that he is "open" to the casino proposal on May 4. Rauner’s predecessor, Democrat Pat Quinn vetoed a similar proposal.

"I would encourage [Rauner] to continue his support. He understands money and given his business acumen, he’ll realize this is a moneymaker," Burke said. "It’s well worth the investment up front … I would make the assumption that those dollars would be recovered quickly."

Neither Emanuel nor Rauner responded to requests for comment.

"If [Rauner] signs the bill that comes to his desk, he would be handing Rahm hundreds of millions of dollars to cover up a dysfunctional fiscal situation and providing a new beachhead for one of the most liberal and aggressive unions in the country," the political observer said.

Burke acknowledged a new casino could be unionized, but said that those matters are mere afterthoughts given the looming pension crisis in the city.

"Chicago’s a union town so I would have to presume that [unionization] would be the case," Burke said. "Whatever the technicalities … we have to keep our eye on the prize by looking at the sizable contribution from this prospective casino to make up" the pension gap.

Matt Patterson, executive director of the Center for Worker Freedom, said that he sympathizes with the tough fiscal situation that Chicago faces from decades of underfunding its pension system. However, the creation of thousands of new union positions could end up further straining the city’s budget and adding to its retirement obligations.

"We understand Chicago officials want to create jobs, and a new casino may be one way to do that. However, if these new jobs add to the unionized public-sector workforce, the whole scheme may amount to nothing more than a huge gift to the mayor’s friends at UNITE HERE, and enlarge the already-unsustainable public pension obligations that are bankrupting the city and state," Patterson said.

An Illinois Senate committee advanced a casino proposal on Thursday that would give Chicago seven years of exclusive revenue. The legislature will decide on the matter before adjourning in June.

Bill McMorris   Email Bill | Full Bio | RSS
Bill McMorris is a staff writer for the Washington Free Beacon. He joins the Beacon from the Franklin Center for Government and Public Integrity, where he was managing editor of Old Dominion Watchdog. He was a 2010 Robert Novak Fellow with the Phillips Foundation, where he studied state pension shortfalls. His work has been featured on CNN, Fox News, The Economist, Colbert Report, and numerous print publications and radio stations. He lives in Alexandria, Va, with his wife and three daughters. His Twitter handle is @FBillMcMorris. His email address is mcmorris@freebeacon.com.