Editorial: Pass this pension deal — and stick to it
Editorials: May 2, 2013 8:40PM
Illinois Speaker of the House Michael Madigan, D-Chicago, speaks to lawmakers while on the House floor during session at the Illinois State Capitol Thursday, May 2, 2013, in Springfield, Ill. The Personnel and Pensions Committee has endorsed a plan by Speaker Michael Madigan to tackle a Goliath-sized public-employee pension deficit. (AP Photo/Seth Perlman) ORG XMIT: ILSP104
Updated: June 4, 2013 6:24AM
And now, for the good of everybody in Illinois, let’s hope state government becomes a little less welcoming.
The Illinois House took a big step Thursday toward resolving the state’s $98 billion pension crisis, passing a set of essential reforms that we urge the Senate to approve as well, without a lot of fuss. Gov. Pat Quinn is ready and waiting to sign the bill.
But as speaker after speaker made clear during an hour of discussion on the House floor before the vote, none of this will matter much — the state’s financial woes will not end — unless state government also stops making promises it cannot keep and learns to live within its means.
Part of the problem all along, House Speaker Mike Madigan drolly agreed when asked how the state got into this mess, is that “Illinois government has been a very welcoming government.”
For decades, that is to say, legislators and governors from both parties agreed to big expenditures, especially with respect to employee pensions, that nobody was really prepared to pay for. Year after year, scheduled payments into pension funds were slashed or skipped entirely. Political expediency shoved aside prudent management.
Largely by trimming benefits, the pension bill approved 62-51 by the House on Thursday could cut the state’s $98 billion unfunded pension liability by as much as $30 billion and lead to a fully funded pension system by 2045. And to make sure the state doesn’t fall into its old habit of failing to make its full annual pension contribution, the retirement systems would be given, for the first time, the right to sue.
Given the state’s abysmal failure to keep up its end of the bargain in the past, this so-called “funding guarantee” is entirely justified. We can’t see how public employee unions — whose members, after all, have always kicked in their full contributions — could accept anything less ironclad. Our only concern, on the contrary, is that the guarantee might not be ironclad enough. As Madigan acknowledged Thursday, the right to sue doesn’t guarantee that a court would order the state to make full scheduled payments, including payments on the back debt.
The funding guarantee doesn’t matter as much as the Legislature’s entire “approach to spending and not spending,” said House Minority Leader Tom Cross, a key supporter of the bill. But as of yet, he said, the House has not “demonstrated the willingness” to live within its means.
Thursday’s package of reforms would demand considerable pain and sacrifice on the part of the employees covered by four state pension systems. It would increase the retirement age, increase employee contributions and reduce cost-of-living increases for retirees. It would exact pain and suffering from the rest of us, too, with annual pension fund payments increasing from $6.7 billion in fiscal year 2014 to $12 billion in 2045.
Meanwhile, Senate President John Cullerton continues to meet with union leaders to craft a possible alternative to the Madigan bill. It would give employees a choice — which Cullerton believes is necessary for any bill to pass constitutional muster — between scaled-back pension benefits or health care.
Any such bill, unfortunately, would result in considerably less savings than in the House bill, and would result in only modest savings if too few retirees chose the reduced pension benefits.
Cullerton deserves considerable credit for working in good faith with the unions. But it’s time, after years of going nowhere, for the Legislature to get a comprehensive and lasting pension deal done. Here’s hoping Cullerton, having fought the good fight, comes around.