Suddenly, the ordinarily humdrum topic of Illinois employee pensions has become an issue in the gubernatorial primary. Republican Bill Brady wants the state to recommit to a fixed payment schedule for reducing its pension fund liabilities. Democrat Edwin Eisendrath says Illinois' leaders must stop "raiding" pension funds and "start setting aside the appropriate amount of money to start repaying them." Republican Judy Baar Topinka warns that in order to be able to afford to build up pension assets, the state will have to make budget cuts, find more efficiencies and "find more revenue sources. It's going to have to be a lot of a lot of things going on," Topinka told The News-Gazette editorial board. She also noted that she has not taken a no-tax increase pledge.
The situation may not be that gloomy. There might be a way for Illinois to meet its pension obligations without raising taxes, but only if the state economy continues to grow for years at the unusually healthy level it is this year (a projected $1 billion increase in revenue) and the government devotes most of that revenue growth to the politically dull and largely invisible pension funds.
On the other hand, put yourself in the position of the typical Illinois politician. That is, your No. 1 priority is re-election, not responsible fiscal management. Given a choice would you devote $500 million in new revenue growth to pension funds, or would you send it to more visible and politically beneficial sources like schools, a new Medicaid program or grants for pork barrel projects?
That's why all this interest in funding pensions is so interesting, so unusual, so unexpected and so welcome. Let's hope the interest does not fade, for the problem sure won't. Over the next six years, the state's pension payment obligation will rise from about $900 million this year to $1.4 billion in fiscal 2007, $2 billion in 2008, $2.7 billion in 2009, $3.4 billion in 2010 and $3.6 billion in 2011.
In other words, the state will have to come up with four times as much money for pension payments in 2011 as today, or an additional $2.5 billion.
It's good to see most of the candidates acknowledging the pension payment time bomb and pledging on the record that they would not ignore it as governor. Still, one candidate hasn't addressed the issue and instead has chosen to use money committed to pension payments to increase spending in other areas.
A perfect opportunity for that candidate – Gov. Rod Blagojevich – to address pension underfunding comes this week when the governor proposes his fiscal year 2007 budget. Will the governor do the responsible thing and increase pension funding to meet an obligation the Legislature and former Gov. Jim Edgar agreed to in 1995, or will Blagojevich do the expedient thing and devote that $1 billion in new revenue to new, and ultimately unaffordable, programs?