Madigan pension plan puts fat in the fire
Illinois' problem is so much bigger than its under-funded public pension systems.
When Illinois House Speaker Michael Madigan says "Jump," state representatives ask "How high?"
The answer this week to Madigan's command was, "High enough to pass a hugely controversial pension bill that requires public employees to pay more and get less."
Madigan's legislation passed by a 62-51 vote, and it now goes to the Illinois Senate, where one of Madigan's fellow Democrats, Senate President John Cullerton, may or may not call it for a vote.
The House action, which came after years of ignoring a growing problem, represents a serious attempt to gain control of financial woes surrounding four of the state's five public pension systems, problems that are so serious that if not fixed, the pension plans face potential collapse.
No one should take any satisfaction in the House vote. It represents another example of overpromising and underdelivering to public employees. This vote represents Exhibit A for the notion of incompetence, profligacy, waste and stupidity, adjectives that describe how Illinois elected leaders have approached the state's fiscal issues for many years.
Madigan's bill calling for a variety of changes in how public pensions are formulated went into great detail describing all the steps the state has taken to put state pensions and finances back on track. Tellingly, he did not mention the major cause of the pension problem, the state's repeated decisions over the years to skip required payments to public pension systems and spend the money elsewhere.
The result is pension underfunding approaching $100 billion. It takes such large contributions now to cover pension obligations that it's impossible to provide sufficient appropriations for core state functions.
There is simply not enough money to go around, and something has to give. In this case, public employees and unions, usually so influential, have come out on the short end because so many other powerful constituencies are being starved of state support.
The Madigan bill requires public employees to contribute an additional 2 percent of their pay to their pension systems, includes more restrictive cost-of-living increases than the current 3 per cent a year, raises the retirement age and limits the salary pensions are based on to $110,000 a year. It also includes language mandating the state to make the required contributions to public pension systems.
It's difficult to say where the bill goes from here. Senate President Cullerton, whose nose appears to be out of joint because Madigan ignored his plan, has not said he will call the bill for a vote. He has said only that he will give Madigan's bill as much consideration as Madigan has given his bill — another way of saying he will give the Madigan bill no consideration.
The Senate is not the only question mark. Union leaders have repeatedly proclaimed that the Madigan bill is unconstitutional. If true, they have nothing to worry about. But the Illinois Supreme Court will make that call, not union leaders or Cullerton. Everyone should hope they do so as soon as possible.
One other theory of impending action involves a conspiracy — that of Madigan and Cullerton pretending to be at odds and, in so doing, adopting the roles of good cop/bad cop. Terrified union leaders rushed to Cullerton's office to negotiate a compromise after Madigan showed his hand.
Perhaps union leaders are finally willing to negotiate a legislative proposal that will take a serious bite out of the pensions' underfunding problems.
But there is a bigger problem here than just the pensions — it's the state's entire approach to spending.
Our governors and legislators over the years have consistently spent more than they had to spend. The result is that they have run up billions in overdue bills and driven the state into effective bankruptcy.
Is there anyone out there so naive as to believe they have learned their lesson? Is there anyone out there who doubts that legislators would go on another spending spree if a revenue windfall would somehow come their way?
Legislators simply do not learn from past mistakes. The voters obviously don't learn either because they keep re-electing the same crowd that created the mess in the first place.