Illinois Week in review – Pension reform hangs over lawmakers’ heads
SPRINGFIELD — Illinois lawmakers wrapped up their fall veto session Thursday, failing to make headway on comprehensive pension reform. Meanwhile, a bipartisan group of rank-and-file lawmakers unveiled a new reform proposal that could come up for a vote during the January “lame-duck” session.
Two Illinois pension experts are divided on the merits of a new reform proposal that seeks to cut pension costs but does little to address the state’s pension borrowing issues.
The plan is either a dramatic step toward rescuing the state from financial ruin or a potentially unconstitutional failure that lacks teeth, depending on who you ask.
“We question why so much time and political capital is being expended on a policy initiative that doesn’t address or solve the problem,” said Ralph Martire, executive director of the Chicago-based Center for Tax and Budget Accountability. “It doesn’t solve the problem created by the unfunded liability. In fact, it’s sort of more of the same. It’s a mishmash of some of the proposals that have been on the table.”
But Laurence Msall, president of the Chicago-based Civic Federation, said the proposal is reasonable, sensitive to lower-paid employees and those close to retirement, and shares the pain of digging the state out of debt among all stakeholders — the government, state employees and taxpayers.
“The greatest concern for most employees is they want to know they are going to receive the benefit they’ve been promised,” Msall said.
The plan, put forth by Rep. Elaine Nekritz, D-Northbrook, and Rep. Dan Biss, D-Evanston, has bipartisan support from 21 other lawmakers — an early show of solidarity that other pension plans have not enjoyed.
Among other things, it raises the retirement age, calls on employees to pay more into their pensions, restricts cost-of-living increases and gradually shifts pension costs to local school districts. It also includes language that the courts can get involved if the state fails to make required pension payments.
It is unclear if enough other lawmakers will be willing to move it through the Legislature by Jan. 9, the final day of the General Assembly’s “lame-duck” session and the date Gov. Pat Quinn set as the deadline for comprehensive pension reform. Nekritz and Biss said it’s a framework that’s up for discussion.
Illinois has a $94.6-billion in unfunded pension liability, the worst of any state in the nation. The Teachers’ Retirement System alone has unfunded liabilities of $52.1 billion. Investment houses are watching Illinois and may lower its credit rating if the Legislature takes no meaningful action soon.
Cost savings from the latest proposal are unknown because the pension systems’ actuaries have not analyzed it, officials said.
Click here for more on what Msall and the Center for Tax and Budget Accountability had to say about specific parts of the plan.
A proposal in the state legislature to borrow $4 billion to pay down the state’s backlog of bills could mean a double-whammy for Illinoisans who ponied up to pay off old bills as part of a 67-percent “temporary” personal income-tax hike.
The problem is that none of that tax money has gone to pay down the backlog, which now stands at a half-billion dollars more than it was two years ago.
It’s a structural issue, said state Treasurer Judy Baar Topinka.
“This is not hard to understand. If you keep doing the same thing over and over and over again, you get the same result,” she said. “If you borrow $4 billion, you’ll pay off the backlog now, but then that cycle will start all over again, and you’ll have another backlog because the structure stays the same, and at the same time now we’ll have a $4 billion bond debt that’s been added on to what we have already.”
In January 2011, Illinois lawmakers promised to use part of a 67-percent personal income tax hike to pay down old bills — bills that amounted to $8.5 billion. Today, as they consider borrowing $4 billion — again to pay down old bills — the backlog stands at more than $9 billion.
As of Wednesday, there were 196,141 unpaid bills at the comptroller’s office, amounting to $6.9 billion. Add to that the bills that haven’t been sent to the comptroller yet, including $1 billion in Medicaid payments and $1.4 billion in employee health insurance payments.
The tax money that was supposed to go toward old bills went instead to pensions and Medicaid, experts say. That, coupled with a spending problem, is why the state is coming around again, looking for money to pay unpaid bills, said Ted Dabrowski, vice president of policy at the Illinois Policy Institute, a right-leaning think tank.
“That promise is broken. All it did was fill the coffers. It allowed the state to pay down the pensions. And that increased tax load helped them avoid reforms on pensions and allowed them just to keep spending more money,” he said.
The borrowing proposal, House Bill 6240, has 17 co-sponsors, all Democrats. But bill sponsor Rep. Esther Golar, D-Chicago, facing opposition to the plan, asked for more time before a committee vote. The Legislature returns Jan. 3 for its final “lame-duck” session, and it could come up then, but its future is uncertain.
Senate approves drivers’ licenses for illegal immigrants
Despite a show of Republican support Tuesday morning, half of the GOP lawmakers in the Illinois Senate voted against a measure that enables undocumented immigrants to obtain temporary drivers’ licenses and insurance.
The measure passed, though, with a final vote of 41-14. It now goes to the House for consideration.
Voting against the measure were Republican senators Tim Bivins, Larry Bomke, Shane Cultra, Dan Duffy, Christine Johnson, John O. Jones, Darin LaHood, Chris Lauzen, David Luechtefeld, Sam McCann, Kyle McCarter and Dave Syverson. Also voting against it were Democratic senators William Haine and Edward Maloney. Democratic Sen. Gary Forby voted “present.”
Lt. Gov. Sheila Simon, a Democrat, said the proposal is an important public-safety measure and applauded senators for approving it.
“Regardless of legal status, we need to make sure every eligible driver in our state has received the proper training and carries insurance – before they get behind the wheel,” Simon said in an emailed statement.
Some of the state’s top Republican leaders came out in support of the measure Tuesday morning.
House Minority Leader Tom Cross and Senate Minority Leader Christine Radogno announced their support at a news conference. Joining them were fellow Republicans state Treasurer Judy Barr Topinka and former Gov. Jim Edgar.
Senate Bill 957 would enable about 250,000 illegal immigrants who already drive in Illinois to have a chance to go through drivers testing, receive a special license good for three years and purchase insurance. That means safer roads for Illinoisans, backers of the bill say.
Officials say uninsured immigrants behind the wheel cause $64 million in damage claims every year.
Contact Jayette Bolinski at firstname.lastname@example.org.
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