By DOUG WHITLEY
On Nov. 6, Illinois voters should approve a constitutional amendment to make it more difficult for the General Assembly to increase public pension benefits.
Voters have been given an unprecedented opportunity to help control their future tax obligations by voting "yes" on the pension amendment that will appear on the general election ballot. An affirmative vote will simultaneously remind Illinois lawmakers they are on the hot seat to deliver additional public employee pension reforms necessary to remedy our state's runaway pension costs.
Amendment 49 would require the Legislature to cast a three-fifths majority vote, instead of a simple majority, to approve pension or retirement benefit increases for public employees and elected officials. The measure would apply to the state's General Assembly as well as units of local government and school boards.
Amendment 49 is important because it addresses the ease and frequency with which public employee pension benefit increases have been approved over the years. Too often, our state's elected officials voted to increase benefits without accounting for how we would pay for them down the road. A higher vote requirement would discourage additional unfunded pension liabilities and help us avoid repeating the mistakes of the past. We should have had such a barrier in place a long time ago.
It is also relevant to note that these little-noticed, incremental increases rarely have been the subject of controversy even though the accumulating effect of these actions has been to impose billions of dollars of debt upon Illinois residents. By requiring a three-fifths vote, rather than a simple majority, the amendment would require legislators to accept a greater level of accountability. A higher threshold will underscore the serious implications to taxpayers of any vote to increase pension benefits. It will also make it more difficult for politically powerful special interest groups to use their resources to secure questionable benefit "sweeteners" that have historically received little scrutiny.
Critics of Amendment 49 rightly point out that, when it comes to public pension increases, the horse is already out of the barn. But that doesn't mean we shouldn't resolve to stop perpetuating bad practices. Any measure that encourages our state and local governments to be more fiscally responsible is worthy of attention. Just because the amendment is only prospective certainly shouldn't be an excuse for inaction.
The vote on Amendment 49 may be interpreted as a referendum on voters' desire to make pension reform a priority. Our state's fiscal situation is dire and will worsen until our elected leaders address the unsustainable pension obligations that weigh heavily on Illinois taxpayers. This year, taxpayers will put nearly $5 billion into our state's five public pension systems. That's just enough to cover our current payments, without touching Illinois' staggering $83 billion in unfunded liabilities that have accumulated because of inadequate contributions for a rich benefit structure.
In addition to devouring an ever-growing proportion of state and local government financial statements, pension costs displace funds for important priorities such as education, transportation and public safety. State government alone will dedicate almost 20 percent of its annual tax revenue to fund public employee retirement obligations in 2012. The amount is projected to increase to nearly 50 percent of total revenue by 2045 unless changes are made.
Meanwhile, Illinois' bond ratings have been repeatedly downgraded and our reputation tarnished by the lack of fiscal discipline necessary to operate with balanced budgets. The fiscal failings are highlighted, of course, by carrying the largest unfunded public employee pension obligations of any of the states.
Legislators deserve credit for creating a two-tiered pension structure in 2010 for new hires and for amending statutes that media outlets found illustrative of the Legislature's lax approach towards granting lucrative pensions at taxpayers' expense. However, further reform is needed. And, voter approval of the pension amendment will remind legislators that pension reform must be their top priority.
Beyond curbing benefit increases, lawmakers will need to look at solutions that strike at the heart of the problem and deal with the massive pension shortfall. Any solution must also address current employees' future retirement benefits. While we should safeguard benefits already earned by state workers, real reform is impossible without restructuring future benefits to sustainable levels. If the Legislature fails to enact effective reforms now, current and future retirees risk a collapse of Illinois public pensions.
This Tuesday, voters can send a message to their legislators about the importance of pension reform by passing Amendment 49 with an overwhelming majority. By adequately addressing our pension burden together, we can restore fiscal health to state and local governments and give Illinois businesses, workers and families confidence that our state has a long-term solution in place that will allow us to prosper today and in the future.
Doug Whitley is president & CEO of the Illinois Chamber of Commerce.