Legislative pension committee meets as the clock ticks on governor’s deadline
By David Roeder and Zach Buchheit Staff Reporters June 27, 2013 6:54PM
Updated: July 30, 2013 8:37AM
Members of a House-Senate conference committee tackling Illinois pension reform said Thursday they’ll try to find common ground on the contentious topic, but none could offer new answers for cutting the state’s nearly $100 billion liability.
At its first hearing, the committee took testimony from advocates on different sides of the pension issue. The witnesses spelled out familiar positions that left the 10 committee members grasping for solutions.
Several said the job will take them beyond the July 9 deadline set by Gov. Pat Quinn, who wants a special legislative session on pensions that day. “I’m not going to judge myself on an arbitrarily set deadline,” said state Sen. Kwame Raoul (D-Chicago), the committee’s chairman.
Raoul said the panel should work quickly while being certain about the financial and legal impact of anything it proposes.
The governor, however, criticized the committee for waiting eight days after its formation to hold its first hearing. Illinois’ unfunded pension liability grows at an estimated rate of $17 million a day.
“Just listening to some of those folks on that committee, they’ve spent more time complaining about the deadline when they should, in my opinion, spend time doing the work of pension reform,” Quinn said. He said he and his staff would help around the clock and over the July 4th holiday. “Forge an agreement. Get it to me. We’ll sign it into law,” he said.
Raoul said committee members were in touch immediately and that eight days was a reasonable interval for organizing a hearing. Its next meeting is scheduled for July 3 in Chicago.
Republicans on the panel argued for fast action. “It’s time to get in the room and hash this out,” said state Sen. Matt Murphy (R-Palatine).
The panel heard from leaders of business groups who emphasized the need for drastic action that will improve the state’s bond rating, from union leaders saying state workers didn’t create the pension crisis but have already helped with potential solutions and from actuaries explaining the origins of the crisis. Recent reductions in the state’s bond ratings give Illinois the worst credit report for all 50 states.
But any suggestion of a tax increase for pension funding, or making permanent a supposedly “temporary” hike in state income taxes, had committee members squirming.
Doug Whitley, chairman of the Illinois Chamber of Commerce, publicly challenged Raoul to sign on to tax increases if the senator insists that benefits for current state retirees cannot legally be reduced. Raoul angrily accused Whitley of misrepresenting his comments about a state constitutional guarantee of benefit levels.
State Rep. Lou Lang (D-Skokie), who is not a committee member, called for making permanent the 67 percent increase in state income tax rates passed two years ago as a budget stopgap.
The added revenue could be set aside for pensions, Lang said. “All we’d be doing is codifying what we’re doing anyway,” he said.
His plan got a cool reception. State Sen. Daniel Biss (D-Evanston) said it was “extremely unlikely” the committee will touch the tax issue. Raoul said Lang’s proposal wasn’t “pragmatic.”
Dan Montgomery, president of the Illinois Federation of Teachers, urged support for union-backed legislation, SB 2404, that he said shaves more from the pension liability while protecting benefits better than a measure, SB 1, advocated by House Speaker Michael Madigan.
By allowing retirees to opt out of health insurance coverage, the bill reduces pension liability by $32 billion, $11 billion more than the Madigan plan. Some lawmakers have questioned the union estimate.
The Madigan bill would end compounding cost-of-living increases, hike retirement ages and increase employee premiums. The union alternative is “legal, fair and effective and an embraceable compromise,” Montgomery said.
The bill requires a 2 percent pension contribution hike from workers and delays cost-of-living increases.