Illinois’ pension crisis, at once vilified as the nation’s most indebted government worker retirement system and trivialized by likening it to a cartoon python, moves to the forefront Sunday when the House returns to the Capitol to conclude a lame-duck session.
Hot-button issues like gay marriage and gun control largely fell by the wayside when the Illinois Senate failed to vote on them, then left town. Fixes to a pension system that’s $96.8 billion short remain elusive.
On Saturday, Democratic Gov. Pat Quinn and the four legislative leaders met for two hours in Chicago to discuss an outline of pension reform proposals but came to no agreement. That makes it questionable whether senators will return before the clock runs out Wednesday.
Democratic House Speaker Michael Madigan of Chicago called the meeting “productive” and said work would continue to try to meet the Wednesday deadline, but acknowledged serious differences remain. Asked why he thought progress was made, Madigan joked, “Well, we weren’t throwing punches at each other.”
Several major hurdles remain in trying to quickly put together a comprehensive pension overhaul before a new General Assembly is inaugurated — not the least of which is how a Democratic-led state government would alter benefits for members of unions that traditionally are powerful Democratic allies.
Another impediment is finding a resolution that meets the state Constitution’s requirement that pensions are a contractual benefit that cannot be “diminished or impaired.”
Public employee unions have warned that filing a lawsuit could be an option unless lawmakers make certain concessions that do not place the brunt of resolving the pension mess on employees who for years paid their share of retirement contributions while politicians failed to pay the state’s share of costs.
The meeting among Quinn and the leaders of the state House and Senate marked the first visible efforts in months by the state’s top politicians to come to grips with resolving a pension burden that threatens to eat up an increasing share of state tax dollars at the expense of other services while Illinois’ fiscal position remains precarious.
An August special legislative session that Quinn ordered to deal with pensions was a bust. Afterward, he promised a robust effort to mobilize public support on the importance of fixing the mess. The governor launched it shortly after the Nov. 6 election of the new Legislature, a push that was best known for a Web video that sought to equate the growing annual squeeze of taxpayer dollars diverted for pensions to an orange cartoon character called “Squeezy, the Pension Python,” its tail tightening around the Statehouse.
For at least the past two weeks, representatives for Quinn, Madigan and House Republican leader Tom Cross have been holding nearly daily meetings to try to reach an agreement.
Also helping advance the issue was a bipartisan pension proposal unveiled early last month by Reps. Elaine Nekritz, D-Northbrook, and Daniel Biss, D-Evanston, that also represented the discontent that rank-and-file lawmakers had with the progress made by Quinn and their legislative leaders.
The talks on Saturday were spurred by Madigan’s decision to lift his demand that any reform legislation shift the cost of suburban and Downstate teacher pensions away from the state and onto local school districts. Republicans and some suburban and Downstate Democrats had labeled Madigan’s requirement a non-starter and warned it could lead to higher property taxes.
Madigan said he made the offer “in the spirit of trying to help the passage of a bill,” but maintained the cost-shifting of teacher pension costs onto local districts “must be addressed” by lawmakers at some point.
The outline under discussion Saturday was aimed at fully funding the state’s pension systems in 30 years. It included requiring employees to pay an additional 2 percentage points toward retirement in exchange for a guarantee that the state could be sued if it failed to make its share of pension funding contributions.
Also discussed were plans to deal with cost-of-living adjustments that retirees receive. Currently, state retirees get a 3 percent annual increase that is compounded — a factor many lawmakers say has led to a rapid increase in the state’s pension debt.
The talks also included freezing those increases for as long as six years, raising the age for when the increases kick in to 67 and basing the bumps on only the first $25,000 of benefits for workers who do not receive Social Security — namely, teachers who are the bulk of the state’s pensioners. Also, lawmakers could limit the amount of salary on which a pension is based.
The state has $5.7 billion devoted to pension funding this year and $6.7 billion for the next budget year, but Nekritz said the plans under discussion could reduce the state’s share of contributions by nearly $2 billion in the new budget.
Asked Saturday what the impediments are to reaching a deal, Madigan basically recited each of the proposals. “It’s all the issues that you’ve all heard, and the question is, ‘Can you bring these all together and get a bill that can pass and be signed by the governor?’” the House speaker said.
In May, Senate President John Cullerton, D-Chicago, and Senate GOP leader Christine Radogno of Lemont put together bipartisan support to pass a bill that would alter the pension plans for lawmakers and rank-and-file state workers.
Cullerton’s position is that a change in public pensions must be accompanied by a choice for employees, such as opting between keeping the cost-of-living increase and giving up health care, or taking a smaller annual increase but keeping health benefits. Cullerton staunchly believes that his approach is the only way to work around the state Constitution’s guarantee that a person’s pension cannot be diminished once it is set. But not everyone agrees with his approach.
Following the meeting, Cullerton, in a statement from an aide, said he was “encouraged,” but still urged the House “to follow the Senate’s lead.” Radogno, however, called the meeting only “marginally productive” and noted Democratic leaders were at odds over whether any pension legislation should include changes being sought by Mayor Rahm Emanuel to deal with Chicago’s municipal pensions.
“We will vote on what Democrat leaders decide to put up on the board,” said Radogno, who did not take questions. “And some of the issues, they can’t even decide if Chicago is going to be in or out of this program. So they have thinking to do before we have an opportunity to vote.”
Quinn spokeswoman Brooke Anderson said the governor “obviously” wants pension reform completed before the new legislature is sworn in Wednesday, saying it is “very urgent that we act now.” She acknowledged negotiators are searching for “common ground” on how to ensure any legislation is constitutional.
Representatives of the state’s major public employee unions have offered to have workers pay an increased share of pension costs, but only if lawmakers guaranteed future state payments and put $2 billion more into the system through new taxes and ending certain corporate tax deductions. Union leaders have asked for a seat at the table but weren’t part of the Saturday negotiations.
Henry Bayer, executive director of the American Federation of State, County and Municipal Employees Council 31, said any pension bill that might come out in the next few days would be rushed and a threat to state employee rights.
“Anything could happen in Springfield,” Bayer said. “Anyone who’s been here before knows how fast something can happen.” Garcia reported from Chicago.
By Rick Pearson, Monique Garcia and Ray Long, Chicago Tribune reporters
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