Gov. Quinn’s budget scare tactic is bogus
RICH MILLER firstname.lastname@example.org August 9, 2012 6:34PM
Gov. Pat Quinn says the state goes $12.6 million further into the hole every day that a pension reform law isn’t passed. | Dom Najolia~Sun-Times
Updated: August 16, 2012 4:26PM
Numbers are hard. People hate math. People really hate reading about numbers and math.
This is why politicians are so successful at using numbers to confuse people. The media too often just accept the numbers and move right along.
But there is a number sticking in my craw these days, and it’s driving me nuts that nobody else is really challenging the governor about it, so I’ve decided to talk about it here.
Wait! Don’t turn the page! It won’t be that bad. I promise. This stuff may look hard at first, but it’s really pretty simple.
Gov. Pat Quinn keeps saying the state goes $12.6 million further into the hole every day that a pension reform law isn’t passed. The additional debt is added to the overall unfunded pension liability. That’s a fancy phrase that describes the money the state should’ve paid into the pension systems over the years and didn’t — and still doesn’t. Every day that goes by without catching up on that unfunded liability means a day that the unfunded liability has a chance to grow.
The media has endlessly repeated this $12.6 million number, and some newspaper editorial pages have used it to demand an immediate pension fix.
The trouble is, the number is really misleading.
“We’ve said repeatedly that every day that goes by, $12.6 million is added to the pension liability,” the governor said this week. “Between now and the election, that’s about a billion dollars.”
Quinn wants the General Assembly to pass a pension-reform bill during a special session he called for Aug. 17. Quite a few legislators want to wait until after the election to pass a bill. They’d rather not have big-time money spent against them by public employee and teachers’ unions this fall. And don’t let anybody kid you, this sentiment is widespread on both sides of the aisle. Republicans as well as Democrats would rather just wait.
What Quinn doesn’t say, partly because nobody has pinned him down on it yet, is that none of the pension reform bills currently on the table will immediately stop that $12.6 million from adding up every day.
And since it’s summertime, any bill with an immediate effective date will require a three-fifths majority to pass. There’s no way the state’s legislative leaders can find that many votes.
They’re having real trouble coming up with simple majorities.
So because our state Constitution has a super-majority requirement for bills passed after May 31 with immediate effective dates, no reforms can conceivably take effect until at least June of next year.
Also, the green eyeshade types who run the state’s pension systems want any reform bills to include a July 1, 2013, implementation date to give them time to get everything ready.
In other words, it doesn’t matter if the Legislature approves a bill on Aug. 17 or waits until after the election because that $12.6 million will still accrue every day regardless of what happens.
The very real problem is the danger of a major downgrade from a credit ratings agency. A major downgrade could push the state’s debt into “junk bond” status, and then a whole lot of big institutions that buy government bonds wouldn’t be able to buy any more of ours. One such threat has apparently been issued already.
So, yes, there is a good reason to pass pension reform sooner rather than later. But this $12.6 million number the governor keeps talking about is, in reality, just scare tactic propaganda, and it should be treated as such.