Some questions on bankruptcy, pensions for GOP gov candidates
By EDEN MARTIN February 12, 2014 6:24PM
With Illinois’ primary election only about a month away — March 18 — the Republican candidates for governor are talking about their views on minimum wages, term limits and the like.
It seems to me that the most important issues have to do with the fiscal future of Illinois and Chicago. Whatever the fate in the courts of the state’s pension reform law, Chicago has its own unfunded pension debts to deal with, and it needs state legislative permission to do just about anything. So here are some questions for the candidates.
Detroit was able to seek federal bankruptcy protection only because Michigan law expressly permitted it. Illinois, unlike Michigan, has not permitted cities here to seek such bankruptcy protection. Would you, Mr. Candidate, support an Illinois law authorizing Chicago to seek bankruptcy protection, like Detroit? If Chicago can’t pay its bills, isn’t a bankruptcy process of some kind necessary to avoid chaos?
Although Michigan Gov. Rick Snyder is talking about the state contributing to help save Detroit’s art collection, no one in Michigan appears to be suggesting that the state should assume responsibility for funding Detroit’s unfunded pension debts. The unfunded liabilities of Chicago’s four pension plans amount to roughly $45 billion. What would you think about the State of Illinois assuming responsibility for funding these pension debts?
Not too excited about that? Well, how about the state assuming the roughly $25 billion in pension debts of Chicago Public Schools? Ridiculous you say? Would violate the principle of local responsibility? Well then, how do you justify Illinois’ statutory commitment to fund K-12 teachers’ pensions for districts like Peoria and Carbondale? That’s what the recent Illinois pension reform bill did. In fairness, if the state pension reform is sustained by the courts, shouldn’t the state do the same thing for Chicago?
If the bankruptcy route remains closed, and if you don’t like the idea of state assumption of Chicago’s pension debts, which of these steps would you favor to address Chicago’s looming crisis:
1. Reforms for Chicago’s pensions similar to those adopted for the state plans (assuming the courts sustain those reforms)?
2. In contrast to the reforms adopted for the state’s plans, what would you think of switching Chicago to defined contribution plans for the future? That could be done without affecting rights workers have already earned or accrued.
3. Or would you prefer to leave Chicago to suffocate in its own pile of unfunded debt — perhaps doubling property taxes to pay its bills — and then watch property owners flee the city? Would that be good for Illinois?
4. Would you support legislation to permit a different revenue-side solution for Chicago? (Psst: A city income tax.)
You say you’d rather wait and answer these irritating questions later — after the Supreme Court rules? You mean after the primary? But whichever way the court rules on the state plans, won’t Chicago’s fiscal mess be facing the next governor?
Aren’t Illinois Republicans entitled to know before the primary what their candidates think about the most crucial issues facing Illinois?
Last question: If the state’s pension reforms are upheld and if similar reforms are enacted for Chicago, do you think pension reform — by itself — would be enough to avoid fiscal collapse? Have you looked at the numbers lately?