Don’t let politics kill a good pension deal
Editorials November 27, 2013 4:44PM
Updated: December 30, 2013 11:30AM
On this of all weeks — as Hanukkah, the triumphant against-all-odds story, gets underway — our faith in miracles has been restored.
Now, if only we could be sure that petty politics — gubernatorial and otherwise — won’t get in the way.
The state’s top legislative leaders reached a deal Wednesday to cut pension costs for teachers, state and university workers and legislators. State lawmakers should ratify that agreement when they return to Springfield on Tuesday. The deal is the closest the state has come to passing a desperately needed pension reform package in years. Lawmakers owe it to taxpayers not to blow this.
The bill’s final language matters, of course, and staffers will spend the next few days turning the agreement into a bill. But House Speaker Michael Madigan, who apparently sealed the final deal, laid out the essential elements on Wednesday, most of which have been known for months. We strongly support its broad contours.
The plan, slated to save $160 billion over 30 years, includes a reduction in cost-of-living raises for retirees but in a way that shields long-term, lower income state workers and keeps up with inflation; a phased-in higher retirement age; a clause to help prevent the state from skipping pension payments; a slight drop in employee contributions; and the funneling of some of the generated savings back into the retirement systems.
These are hard fought and, largely, fair components that must be protected from the sabotaging force of politics.
◆ Madigan on Wednesday said Republican gubernatorial candidate Bruce Rauner has been lobbying Republicans to reject the deal because the “funding guarantee,” the clause that obliges the state to make its annual pension payment, is too strong and could hamstring the state.
Under the funding guarantee, as we understand it and as it has been drafted in other pension bills, the state retains some flexibility, particularly in the event of a financial crisis. And more importantly, the state has a fiscal and moral responsibility to make these payments — its failure to do so helped create this pension mess. The guarantee also could help the state’s credit rating and could help the bill survive a court challenge.
Given the thinness of the argument against the funding guarantee, we fear this is straight politics. Solving the state’s fiscal mess could undercut Rauner’s chances to win either in March or November by giving his opponents a key victory. We reached out to Rauner on this but didn’t get a return call.
◆ In the last few months Senate President John Cullerton had emerged as one of the biggest impediments to getting a pension bill. But he moved significantly over the last month, for which he deserves credit. His spokesman says Cullerton will work over the next few days to drum up support for the pension package, something he has failed to do in the past. We are hopeful that he will deliver.
In talking to members of his caucus, Cullerton should make clear that even though the package could save roughly the same amount as SB1, a bill they roundly rejected, Wednesday’s package is a much better deal for workers. Compared to SB1, it generates the savings in a way that inflicts less pain on current employees and retirees and demands more of the state. Blind politics and a simple-minded focus on appearances must be kept at bay.
◆ The Republicans in the General Assembly also compromised to make this deal happen. They pushed to generate as much savings as possible and they produced results. Their members need to know they’ve scored a victory and be reined if they demand more.
Wednesday’s agreement is long overdue: the state’s $100 billion unfunded pension liability is strangling the state, forcing devastating cuts to schools, health care and other basic services. Without pension reform, these cuts are only the beginning.
No one wins — even the unions which are vehemently opposed to any reform package that looks like the one announced Wednesday — if Illinois’ pension crisis isn’t solved. Wednesday’s deal is a huge step forward in the effort to save the state’s retirement systems and solve the state’s financial crisis.
In this season of miracles, let’s get this thing done.
Editor’s note: This editorial was posted online on Wednesday afternoon.