What others are saying about pensions
Excerpts from other Illinois newspapers' editorials:
Dec. 4, 2013
Chicago Sun-Times; http://www.suntimes.com
Few legislators took pleasure in the difficult vote to scale back pensions for teachers, state workers, university employees and legislators. Plus, the honest ones know their work has only just begun.
The cost-cutting pension bill that passed is just the latest and largest step Illinois needs to take to climb out of a massive financial hole. Next up is the job of crafting an austere budget for the fiscal year that begins July 1. To be smart, that budget can't possibly count on the roughly $1.2 billion in year-one savings promised in the pension bill.
A lawsuit challenging the constitutionality of the bill is all but guaranteed, opening the door to a protracted court battle with an uncertain outcome.
Until the courts rule, Illinois should not count on a dime of savings.
When Gov. Pat Quinn was asked his intentions on that question Tuesday evening, he dodged. After an impressive showing here, Quinn — the dyed-in-the-wool, pro-labor Democrat has been a cheerleader for comprehensive pension reform for years and in June established the legislative committee that set the stage for Tuesday's vote — has to keep up the fight for continued fiscal restraint.
There's no sign of that pressure letting up. Under the bill, the state will be obliged to make its annual pension payments. The so-called funding guarantee will for the first time allow the retirement systems to sue if the state fails to make its annual pension payments.
Drafters of the bill insist there is real wiggle room, despite what some critics say. In any given year the Legislature could vote to reduce their pension payment and the retirement systems would be able to sue only to force payment of the lower amount. But the risks over decades are real. If the pension obligations one day are not met, taxes could rise.
Peoria Journal-Star; http://www.pjstar.com
As we have written before, we feel strongly that no group should have been spared these reforms.
As Madigan has said previously, the judges "were excluded as a practical decision," in the interest of relieving them "of the burden of dealing with a conflict of interest."
That's one way to look at it, though that conflict didn't seem to bother them in 1985, or again in 2004, when they ruled that in regard to their own retirement benefits, the Illinois Constitution's pension clause means what it says about not permitting them to be "diminished or impaired."
Precedent and consistency would suggest that the Supreme Court, once the case gets there, would fall on the same side now, though some time has passed and the cast of characters in the dark robes has changed somewhat. Should they reverse course, it may be difficult to escape the perception in some quarters that their decision was in effect purchased by a Legislature that deemed it advantageous to leave their pensions — and their pensions alone — intact.
Madigan also arguably did the judiciary no favors when he suggested earlier this year that "there will be at least four members of the Illinois Supreme Court" — a majority — "that will approve the bill."
He was speaking to an earlier version of it at the time, and he quickly clarified that he'd had "no conversations with any member of the court" to lead him to that conclusion, that it was just his "judgment."
Whatever, this is a flawed, awkward and unenviable arrangement that no doubt the Founders, had they imagined it, would very much have frowned upon.
Belleville News Democrat; http://www.bnd.com
Some conservatives complained the bill didn't go far enough, but the caterwauling from state employees and their unions tell you that these reforms are substantial.
The workers and their reps claim the plan will be ruled unconstitutional, but we are cautiously optimistic that the courts will allow it. The pensions themselves aren't being reduced, but rather add-ons like the overly generous COLA formula and the unreasonably low retirement age.
And bottom line: The current system is fiscally unsustainable.
A constitutional pension guarantee means nothing if there isn't enough money to fund the pensions. Just ask workers in Detroit, who thought their pensions were guaranteed by their state constitution until a judge ruled otherwise.
No one was talking pension reform in Detroit 10 years ago, but we suspect a lot of workers wish someone had made incremental changes back then to ensure that pensions would be funded into the future — what Illinois did on Tuesday.
Dec. 3, 2013
The (Springfield) State Journal-Register; http://www.sj-r.com
The new pension-reform proposal appears to make concessions that will accommodate employees and retirees, meaning it, too, may have a chance of withstanding a court challenge.
It is kinder to pensioners who are older and have smaller pensions to rely on. It has a funding guarantee that invites court challenges if the state skips pension payments (part of the reason for Illinois' pension mess) in the future.
Employee contributions to their pensions will go down by 1 percent. The proposal also offers an optional 401(k)-style defined contribution plan — something Republicans have been pushing for years. And it makes a significant dent in the state's pension liability.
To state workers, it's not an ideal plan. Younger employees would have to work longer. The current 3-percent annual cost-of-living adjustment for retirees would be replaced with an annual increase to only a portion of their retirement benefits. Some annual adjustments will be skipped. Changes to the COLAs — the largest item driving higher pension costs — were not unexpected, though. ...
The legislation is a carefully crafted compromise that contains plenty for everyone to both love and hate. It is worthy of a vote, and if it passes, the unions can challenge it in court. But it contains concessions for workers and retirees, and it may be their best hope for protecting their pensions in the future in a state on the brink of ruin.
Dec. 2, 2013
Chicago Tribune; http://www.chicagotribune.com
If legislators don't take a big step to unravel this crisis — an unfunded pension obligation of $100 billion that grows by millions every day — then the state that also boasts the nation's lowest credit rating, and one of the nation's worst jobless rates, will suffer even more. As will its citizens, many of whom wish pensions didn't devour more than one-fifth of the state's operating budget — money that could help educate children, care for the sick and meet other needs.
It isn't just the pension crisis that should animate legislators' decisions this week — and that should rivet every voter's attention.
With or without pension reforms, state government and many local governments (that's you, Chicago and many of its pension-strangled suburbs) face dreadful financial prospects: higher taxation, fleeing employers and yet more unemployed citizens. ...
In 2014, lawmakers may decide whether to stop the scheduled rollback of the income tax increase the General Assembly approved on 1/11/11.
On Jan. 1, 2015, Illinois' personal and corporate tax rates are slated to retreat part of the way to their pre-2011 levels.
Some legislators will want to wait until after the November general election, then extend or even raise today's income tax rates.
Others will support a constitutional amendment that would eliminate Illinois' flat income tax rates, the better to allow future tax hikes.
Still other pols of both parties will, we hope, spend the next 13 months reminding colleagues and voters that a state with such an uncompetitive climate to attract employers should focus on reducing its spending and tax rates, not raising them.
Dec. 1, 2013
The (Bloomington) Pantagraph; http://www.pantagraph.com
If and when a pension solution is acted upon, expect at least some elected officials to act as if the state's financial problems are over.
But that's clearly not the case, and pension reform is just the beginning of a series of issues that need to be resolved with the state's budget. ...
Reforming the pension system should free up some money in the state's budget and also bring to a halt recent credit rating downgrades that will cost taxpayers more money every time the state borrows money.
But the state's budget has a fundamental flaw — most call it a structural deficit. It's an issue that won't be solved just by solving the pension crisis.
The problem was pointed out in a bit of news last week the state's backlog of unpaid bills is growing again and might reach $9 billion by the end of December. The amount fluctuates because of high revenue and low revenue months. But the fact remains that, at the end of its fiscal year, the state is several billion dollars short of paying its vendors on time.
If you take the budget as a whole, not just the general fund, the state spends more than it brings in. That has been the problem for several years, dating back to before the recession.