Senate President John Cullerton | Seth Perlman~AP
Updated: November 24, 2013 6:26AM
Illinois Senate President John Cullerton is setting up the State of Illinois — and himself — for failure.
It’s clear after comments Cullerton made this week that he is now officially among the state’s biggest impediments to solving a very real fiscal crisis. As 10 state legislators on a pension committee this week struggle to put the finishing touches on a bill to lower pension costs in a state drowning in them, Cullerton essentially said the whole thing is a waste of time.
The only course left, then, is for rank-and-file legislators to do an end-run around Cullerton and get a pension cost-cutting bill ready to go this week. Lawmakers then can vote on it when they return on Nov. 5 for the second half of their fall session.
Illinois’ fiscal crisis, Cullerton told WGN-AM radio this week, isn’t a crisis after all. We wonder what the credit agencies that keep downgrading Illinois — which has the nation’s largest unfunded pension liability — think about that.
And here’s the worst part: If legislators listen to Cullerton’s nonsense, Illinois will lose the two things the state needs most — a bill that significantly reduces pension costs and continuation of a state income tax increase that is set to expire in 2015. Without pension reform first, no Republicans and few Democrats will vote to keep taxes elevated after 2015.
Cullerton suggests that Illinois could manage just fine without pension cost-cutting, so long as that tax increase continues. The benefit-cutting effort, he argues, is part of a ploy by some to save money so Illinois can lower its income tax rates. He didn’t spell it out on WGN, but it’s clear from previous comments that Cullerton is referring to the Republican-minded business community, epitomized by Chicago’s Civic Committee.
There’s some truth there, but far from the whole truth. Two of the biggest advocates for pension reform, for example, are both non-business-type-Democrats, Sen. Daniel Biss and Rep. Elaine Nekritz. And while many Republicans want to kill the tax increase, many others readily admit, on and off the record, that Illinois cannot possibly roll back the income tax hike, which went into effect in 2011. If it expires, Illinois is out $5.4 billion a year. The great irony here is that Cullerton’s actions today could end up forcing an end to the income tax increase.
Actuarial analyses of pension scenarios under consideration — including one where nothing changes — make clear that no matter what legislators do, including major pension cutting, a significant portion of the state’s budget for the next 20 to 25 years will go toward paying pension bills, consuming 16 to 24 percent of the state’s general revenue fund annually. And that’s assuming the tax increase continues. Those percentages would jump up several points without the extra $5.4 billion.
Pension reform isn’t salvation, then; it just begins to dig Illinois out of its hole. Without reform, the hole — think of a massive sinkhole — grows bigger and bigger.
Cullerton says he’s the flexible guy here, that he’s willing to support pension reform. But the message he sends with his latest comments is that it’s unnecessary.
That simply does not add up. Illinois’ faces a bleak future without pension cost-cutting, especially if the income tax hike disappears. We can expect continued slashing of core services, such as education, even greater delays in paying state bills to schools, health care workers and social service agencies, and the potential undoing of the state’s pension systems for teachers, state workers and university employees. The pension systems could simply run out of money to pay benefits.
The only good that comes out of this clarity is that we now know where Cullerton really stands: in the way of desperately-needed reform and in lock step with the unions that support him.
It’s time for lawmakers to own up to this very real crisis, bypass Cullerton and reach a pension deal this week.