Jim Dey: Nervous legislators would prefer to skip pension issue

Jim Dey: Nervous legislators would prefer to skip pension issue

Politics and government policy go hand in hand, and when the policy is bad, the politics often are worse.

So forgive our state legislators for their reluctance to address the state's pension problems. They may not be profiles in courage, but they are, at least as judged in the jungle of politics, profiles in common sense.

That's why another week has passed in Springfield without action on the $100 billion underfunding problem that afflicts the state's public pension systems. Legislators met this week in their annual fall veto session without taking action. They'll return to Springfield Nov. 7-9, and the prospects for action then are not great either.

Neither two area legislators nor Gov. Pat Quinn's budget spokesman overflowed with confidence about having a vote on a legislative fix for pensions.

"It's only safe to bet on inaction," said Abdon Pallasch, a former statehouse reporter who works for Quinn on budget issues.

He was willing to go so far as to suggest "there is a possibility" something might pass.

State Rep. Chapin Rose, a Mahomet Republican, was similarly reluctant to predict action.

"I don't have a crystal ball on that," he said.

State Rep. Chad Hays, a Catlin Republican, reminded that "big things have happened on short notice before in Springfield" but said a pension bill "seems to be unlikely."

"I think the likelihood (of action) is going to be in the spring," he said.

It's well known to the public and ever better known among legislators that the state's pension problem grows worse day by day. It wasn't all that long ago that the current $100 billion underfunding problem was $50 billion.

Action then, theoretically, could have saved pain now. But that depends on what kind of pain we're talking about.

Members of the Illinois House and Senate are terrified of the political fallout of casting an unpopular pension vote. That's why any fix that requires economic sacrifices by current pension system members and state retirees will require a "structured roll call" to pass.

What's that? It's somewhat akin to a conspiracy by members of both parties for each side to put just enough yes votes on an unpopular bill to pass it. That way, legislators from both parties who might be endangered by voting yes can vote no and then, with great sadness, tell unhappy constituents that they did all they could to defeat whatever bill was passed.

The problem Democratic and Republican party leaders are having is putting together a package on which they can agree and then pass.

After failing earlier this year to pass a pension bill, legislative leaders put together a special eight-member panel (four Democrats and four Republicans) to work out a deal. So far, there's no deal.

The outlines of an agreement are in place, the most important feature of which is a reduction in the annual 3 percent cost-of-living increases government retirees receive.

The new plan calls for cutting the annual 3 percent increase to one-half of the annual increase in the cost of living, the lowest of which would be a 1 percent annual increase and the highest 4 percent. Negotiators are betting, not necessarily wisely, on continued low inflation, hoping that doing away with annual 3 percent hikes will dramatically slow the increases in payments flowing out of the pension systems.

Another key aspect of the proposal is that those who pay into the system would pay 1 percent less than they do now.

That reduced payment is perceived as a necessary ingredient to allow state lawyers to argue that the proposed package does not violate a clause in the Illinois Constitution that prohibits any diminution in pensioners' benefits.

The existence of that clause, which has not been tested in the courts, has undermined a solution to the pension problem. Without legal guidelines, legislators have been left to speculate about what constitutes a diminution of benefits.

It certainly means that if a retiree receives $100 a month in January he could receive no less than $100 in February. But are scheduled increases — say a 3 percent COLA in January 2014 — also protected from reduction? Until that question is answered, a legislative fix on the pension issue will be mired in confusion.

The conference committee is reported to be split on the package between Democrats (for) and Republicans (against). GOP members reportedly feel the plan, as drafted, won't save enough money to fix the problem.

Quinn spokesman Pallasch said negotiations continue in an effort to win bipartisan support. Then again, Rose said there are indications that separate Democratic legislators — state Sen. Kwame Raoul of Chicago and state Rep. Elaine Nekritz of Northbrook — may propose their own individual plans.

The political calendar also has complicated circumstances.

Politicians always are looking for an excuse not to take action. They range from "we can't do that because next year is an election year" to "we can't do that because this year is an election year."

That pretty much wipes out all the years as hospitable times for casting controversial votes.

One current excuse is that it would be unwise to vote Nov. 7-9 because December is the filing period for next year's election. Legislators reason that it would be safer to wait until after the filing deadline to avoid drawing a primary or general election opponent.

But there also is a good reason for delaying action.

If legislators vote in the November veto session on a pension bill, it will require a three-fifths majority to pass and not take effect until July 1, 2014. If they wait until after Jan. 1 to act, the bill will only take a majority vote to pass and could take effect immediately. An additional benefit is that it's easier to put together a structured roll call with a majority vote requirement than an extraordinary majority requirement.

More legislators would be free to vote no, even though they wish the bill to pass.

Considering all these factors — the policy and the political fallout — the pension issue represents a negative daily double.

Legislators want to be liked, and they like to help people. It's because of that they handed out overly generous pension benefits and approved one early retirement program after another. It's why they spent money that should have gone to pensions on other programs.

Now it's time to pay the piper, and the cost will be so high many people will be unhappy and some people will boil with rage.

The average legislator will run screaming from the room to avoid that scenario. But running room is getting increasingly hard to find as Illinois' pension doomsday clock ticks on.

Correction: In last week's column, I incorrectly reported that state Sen. Michael Frerichs, D-Champaign, cast a yes vote for 2012 legislation that allows hospitals to avoid property taxes if they provide a sufficient amount of charity care. Although Frerichs cast a yes vote for an earlier and different version of the bill, he cast a no vote on the final version.

Jim Dey, a member of The News-Gazette staff, can be reached by email at jdey@news-gazette.com or at 351-5369.

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samret wrote on October 26, 2013 at 8:10 am

I have no doubt that Mr Dey is aware of the attempt by the Blagoevich administration to reduce the COLA of the judges.  That attempt was met by nothing less than rebuke by the IL SUPREME COURT using the pension protection clause of the IL CONSTITUTION.   While all bets are off in this State,  it difficult to believe that the Supreme Court would make a ruling in a case about reducing retiree COLA that would not be consistent with their own prior ruling. I have to believe in the integrity of the Supreme Court of this state.

Skepticity wrote on October 26, 2013 at 10:10 am

I am tired of the focus on this being defined as a "pension crisis." 

It is a budget crisis.  It was caused by the ongoing actions of elected officials spending money they didn't have.  The money that would have supported the pension fund was spent elsewhere, and the fiduciary responsibility to fund the pension obligation was ignored. 

Some was spent on legitimate government expenses, but much of the money also went into pay-to-play projects that insured contributions from favored businesses to politicians' re-election funds, and to unearned benefit programs for constituencies that would support the re-election of those who provided the free income. 

State employees contributed and earned retirement benefits under contract as a condition of their employment.  Large numbers of unemployed individuals have received unearned benefits for generations in exchange for their votes.  Illegal immigrants receive benefits and can attend universities at rates lower than life long Illinois residents.  None of these recipients of unearned benefits are contractually entitled to the money they receive from the State of Illinois.  Illinois, and especially Chicago, is a magnet for such populations due to the generosity of benefits that are unearned and for which there is no contractural obligation.  They are drawn to the benefits given in this state as opposed to less generous states. 

State employees earned the retirement benefits as part of their compensation package and these benefits are guaranteed by the Illinois Constitution. 

Stop calling it a "pension crisis" and stop framing it in a way that scapegoats Illinois government retirees as the problem.  Stop the "Yes, it is unfair, BUT..." thinking. 

Make your cuts somewhere else!

Sid Saltfork wrote on October 26, 2013 at 11:10 am

Thank you samret, and Skepticity.

The good ole, one paper in the area bangs the drum again for theft.  They tried demonizing the state employees, and retirees; but now they feel sorry for us while they encourage the theft again.

What would happen if your bank told everyone that your savings must be stolen so they could avoid raising banking fees?  The retirees depend on their constitutionally protected pensions.  There were no "overly generous" changes in the pension system; not for the rank and file employees.  The crux of the problem is that the employer did not make it's payments while the workers paid theirs with every paycheck.  

There are solutions to the problem; but the state, the corporations, and the media do not want to encourage them.   First, changes can be made from a date forward on the current employees who will pay less into their pensions.   Also, the State of Illinois "promises" again to pay it's employer share of their pensions.   The retirees do not get any break.  They paid, and retired after years (40 plus in my case) of paying into their pensions when their employer did not.  The legislators, and governors in the past created the "diminshment, and impairment" in the State of Illinois Constitution to assure the retirees that they would have their pensions in their old age.  Second, the current temporary tax could be made permanent with the proceeds going to the pension debt, and vendor bills.  Third, the retirees could be exempted from the "pension reform" just like the judges, and the legislators (yes, there is at least one attempt being made to exempt the legislators pensions). These could pass the constitutional hurdle.

I did receive my CMS letter today informing me that I MUST ENROLL in one of the Medicare Advantage Plans by Dec. 13th.  What the dirty deal being concocted amounts to is the General Assembly with Mr. Fuddles concurrence will pass "pension reform" in the spring.  Medicare's date to change the supplemental insurance is in the fall.  The "pension reform" will be either having no insurance from the time of the "pension reform" bill, and keeping the retiree COLA; or accepting poverty in the future.  When you are elderly with medical problems (terminal illness in my case), you cannot go without insurance for 5 to 6 months.  That will be the "choice" retirees will have to make so the Profiles in Sewage can skirt the State of Illinois Constitution.

Theft is theft no matter how you justify it.  May all past, and present legislators, and governors rot in Hades with broken backs!!!  

aszakmary wrote on October 27, 2013 at 12:10 am

The SURS statute in the Illinois Pension Code is very precisely worded. It specifically states that, since January 1, 1990, retirees are entitled to a 3% compounded automatic annual increase (AAI) in their monthly pension on January 1 of each year. In a different section, it also makes clear that employees contribute 0.5% of their salary each year specifically for the purpose of providing funding for the 3% AAI in retirement. I do not see how it can possibly be clearer that the so-called "COLA" that the proposed legislation is trying to diminish is a contractual right that, constitutionally, cannot be diminished. If this legislation is passed and is upheld in state and federal courts, then no contract in the United States will ever again be worth the paper it is printed on, and the rule of law that has prevailed since the founding of this republic will have ended for good.