Ill Pension

Illinois reels after lawmakers reject pension reforms

Pat Quinn / AP
January 11, 2013

Illinois lawmakers rejected Democratic Gov. Pat Quinn’s push for pension reform in the state’s lame duck sessions this week, leaving Illinois with nearly $100 billion in unpaid pension debt and the Democratic Party at odds with its labor base.

Quinn attempted after several rounds of failed negotiations with lawmakers and labor interest groups in 2012 to outsource reforms of the state’s pension system to a super committee tasked with eliminating the system's $96 billion debt. Powerful House Democrat Mike Madigan adjourned the legislature on Tuesday afternoon without bringing Quinn’s proposal to a vote.

The governor castigated lawmakers for not addressing the "urgent crisis" by refusing to vote on his proposal, which would have allowed a select committee of experts appointed by legislative leaders to make pension reforms without legislative approval. The legislature could only reject the reforms via a majority vote in both houses.

"Public pension reform is absolutely necessary if Illinois is going to have sound financial footing once and for all," Quinn said at a press conference on Tuesday. "We cannot allow our state economy, the Illinois economy, to be held hostage by political timidity… failure to act will only make the problem worse."

The state will be forced to increase its pension by nearly $1 billion next year for the second year in a row. The state will spend $5.9 billion on the pension system in FY 2013, which ends in July 2013, and will spend nearly $7 billion in FY 2014.

"It’s going to eat up about 15 percent of all general fund [revenue]," one Illinois political insider told the Washington Free Beacon. "That’s money that can’t be spent on cops or schools or anything that serves the people."

The expanding debt has put pressure on state coffers to fulfill current sources, contributing to the state’s $10 billion in unpaid bills. The staggering levels of debt led Moody’s Investor Services to give the state the nation’s lowest credit rating. Its A2 ranking places it one spot below debt-plagued California and even with Botswana, a southern African nation that is 70 percent desert.

Democrats hold dominant majorities in the state legislature but that has not aided Quinn in his fight against state unions. The dire straits of state finances were not enough to compel Democratic lawmakers who support pension reform to get behind the plan. Democratic Rep. Barbara Flynn Currie blamed the failure to enact reform on Quinn’s lame duck maneuvering.

"Your proposal, in fact, will be taking us three steps back," she said. "We were going places and it doesn’t seem to me all that clear that punting to a commission delaying things is going to get us to the goal line."

A major roadblock on the path to reform has been the state’s powerful public employee unions. We Are One Illinois (WAOI), a group that represents more than 1 million state workers, has formed to fight the reforms. The group has put forward alternate plans to prevent Quinn from cutting automatic cost of living adjustments for workers and retirees.

"There’s no question that the governor has tried to blame workers and retirees for the state’s financial problems," said Anders Lindall, spokesman for the powerful American Federation of State, County and Municipal Employees, a member of WAOI.  "He has been dishonest about the real harm his pension funding cutting would do to workers and retirees."

Unions hope to increase worker contributions by two percentage points, which will raise $350 million for the system. That would be enough to pay for 20 days of pension costs, which are growing at more than $17 million per day, according to Quinn. The plan would also raise taxes on businesses by $2 billion by closing tax loopholes and deductions to save the state money.

"Our proposal is not only the fairest, but it’s the only one out there that is constitutional," Lindall said. "[Quinn’s lame duck plan] was widely seen as desperate and clearly unconstitutional because it delegates legislative authority to an unelected, unaccountable committee."

Public Policy Polling reveals that Quinn has become the nation’s least popular governor with a 25 percent approval rating following a year of contentious negotiations with state unions that has seen him terminate the state’s contract with AFSCME.

"No governor has ever terminated a contract as Pat Quinn has done," Lindall said. "He has taken radical and divisive steps that have backfired on him."