Pension angst in Springfield

Our elected officials can run, but they can't hide from the financial consequences of their bad decisions.

Illinois legislators took a tough vote in December, passing a pension reform package that outraged many public employees, retirees and their union leaders.

That bill now is being challenged in the courts.

Meanwhile last week at the General Assembly in Springfield, it was deja vu all over again — legislators are confronted with controversial pension legislation involving two of Chicago's four public employee pension systems. Once again, legislators are skittish about passing a bill that could bring political opposition down on them. Once again, top state officials like Chicago Mayor Rahm Emanuel and House Speaker Michael Madigan contend legislators must act immediately to address the problem.

"Why would you want to slow it down? Why would you want to do that? What's the problem with calling the bill today? What are you concerned about?" Madigan asked a group of reporters who queried him about the fast track the pension bill is on.

That was Madigan's non-answer to reporters' question about why legislators should pass a complicated, controversial pension bill just two days after the proposal was unveiled by Mayor Emanuel.

Democratic leaders obviously want to pass the legislation before union leaders and public employees have time to lobby against it. Chicago Democratic House and Senate members sense potential political problems; their legislative leaders do not want them to understand the extent of those problems until after they've voted yes.

Try as our public officials might, they can't escape the consequence of years of bad decisions on public pensions.

The state of Illinois approved generous pension benefits for public employees and allowed them to retire early to collect them. But it neglected to properly fund the pensions, creating an underfunding problem that poses a long-term existential threat. The city of Chicago did the same thing, creating what Mayor Emanuel and others are calling an impending financial crisis. Emanuel's solution to the problem, one that must be approved by state legislators, is to dramatically increase property taxes as well as boost employee contributions to fund the pensions while reducing benefits, particularly annual cost-of-living increases, to retirees.

Public officials' first instinct on the public pension problems was to do nothing, and they did it for so long that the financial woes look unsolvable to many. Now they must act, but their options are so distasteful they can hardly stand to do so.

Unfortunately, what's transpiring in Illinois and Chicago with respect to public pension is becoming more and more common. Our elected officials may have been irresponsible, but they are not alone. Some of the chickens have come home to roost and the rest are on their way.

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Sid Saltfork wrote on April 07, 2014 at 12:04 pm

Ah... the News Gazette is back to demonizing public service employees, and retirees.  The one, and only newspaper in the area which has a high population of retired, and current public service employees, tries to whip up the howling mob again for more "pension reform".  It makes no difference that the retirees paid their required contribution towarded their pension with every paycheck; and the employer used the money for pork barrel politics.  It makes no difference that the state supreme court has yet to rule on the constitutionality of the "pension reform".  It does make a difference to whip up controversy that more "pension reform" needs to be done. 

What needs to be done is for the unessential spending to stop; and the debts, and obligations to be paid.  The citizens of Illinois are on the hook for what their elected officials past, and present did.  It is either that or thievery.  Theft is theft no matter how it is rationalized. 

Sancho Panza wrote on April 07, 2014 at 6:04 pm

When, in this article, did the N-G get back to demonizing "public service" employees?

Sid Saltfork wrote on April 07, 2014 at 8:04 pm

"The state approved generous pensions to public employees, and allowed them to retire early."   Thirty years as a state employee allows a 50% pension of the average four highest years of salary.  The majority of state employees were earning less than $50,000 per year.  That is $25,000 before local, federal, and assorted taxes which the employee paid prior to, and pays after retirement.  For those who were state university employees, they receive no Social Security, or a 60% reduction in Social Security if they worked prior to, or after university retirement.  The pensions were not "generous".  They were due to the lack of raises, and benefits.  They were negotiated in collective bargaining.  Not many public service employees retire at age 55.  Most work into their 60's. 

The News Gazette pulled this stunt before "pension reform".  "Now the chickens are coming home to roost" is just another propaganda piece for more "pension reform".  Somehow, many of the residents of Illinois see themselves as "tax payers"; but not "citizens".  They are happy to accept state grants; but they do not want to pay the bills, debts, and obligations.

Find another windmill to joust; or use the local newspaper which generates wind.  Ask about the tax loophole for "ink, and paper".  There is a state "tax reform" issue.  Oh... that is off limits since it is "business related".  It is easier to go after old state, university, and teaching retirees who actually served their fellow citizens, and their children.

Sancho Panza wrote on April 08, 2014 at 9:04 am

Glad to know that different views between you and the N-G on what is considered generous retirement benefits is what resulted in the perceived demonization.  As you've laid out, U of I retirement benefits are quite good, but maybe not to the extent to be called generous.  

As you mentioned, the U of I employees were nieve enough to negotiate for retirement IOUs instead of cash and the people of Illinois were dumb enough to elect policy makers that promised something for nothing because they passed the bill to future generations.  Everyone was happy decades ago, but now the "chickens are coming home to roost" because changes to the pension structure (costs and benefits) are necessary.

 

 

Sid Saltfork wrote on April 08, 2014 at 1:04 pm

It is the same as with the bond holders.  It is debt owed.  The "necessary" will be answered by the State of Illinois Supreme Court.  The pension debt is the same contractual agreement as with the bond holders.  The money that the employer was required to pay into the pension systems was spent on projects for all of the state's citizens.  The citizens benefited from the diverted money.  Now, "the chickens are coming home to roost".  The debt to the retirees will be paid.  The "temporary" tax will become the permanent tax.  If the pork barrel spending is stopped, and the tax is permanent; the state's debts can be paid.  Every one benefited from the stolen money.  Now, it has to be paid back.

Jason G wrote on April 07, 2014 at 11:04 pm

Let's get this straight-the State of Illinois contributes about 19% of the total contributions to pensions-the other amount comes from employees and employer contributions,  The rest of the "Required" funding is in the form of investment returns.  What taxpayers are really paying for now is the over 100 billion dollars the State failed to contribute in the past and the interest on the money it borrowed to try to rectify its non-payment.

Sid Saltfork wrote on April 08, 2014 at 1:04 pm

The State of Illinois is the employer.  The employer failed to pay it's money while the employees paid theirs.  The returns were fine.  Your correct that the stolen money was replaced by borrowed bond holder money.  The "pension debt" money is owed to the bond holders, and the retired employees.   If the retirees are to be stiffed, the same should apply to the bond holders.  That would present a problem for the state borrowing more money though.  The answer to the problem is hard, but simple.  Make the "temporary tax" a permanent tax, and stop all non-essential spending like the current grants to municipal parks.  After all, the "pain must be shared".