Chicago Sun-Times

Back to basics on fixing state pensions

Fri, 13 Sep 2013 17:06:00 -0500

The quest for a public employee pension reform “compromise” goes on. It’s an arm-wrestling contest in Springfield to find some combination of reform (cost-reduction) and funding elements that will attract enough votes to pass both the state House and Senate. It’s about power, not about getting the “right” answer. And the truth is, there is no single “right” answer. At this stage, all possible answers are bad for somebody. It’s “Syria” right here in Illinois. But maybe going back to basic principles would point to a “least-bad” solution. What are they? 1. If possible — if we can avoid state …

With term limits, boot out career pols

Thu, 05 Sep 2013 00:42:57 -0500

According to pollsters, proposals to establish legislative term limits are extremely popular, both nationally and in Illinois. The interesting question is — why?

How pension mess could get worse

Wed, 21 Aug 2013 22:12:00 -0500

Here’s what our Illinois Constitution — Article XIII, Section 5 — has to say about pensions: “Membership in any pension or retirement system of the State, any unit of local government or school district … shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.” Does this mean “any” pension system of “any” city or county, like Chicago or Cook County? Sure. Chicago, including the Chicago Park District and the CTA. Also Cook County, the Forest Preserve District. Same with other cities, towns and counties all over Illinois. And the “benefits” of these pensions …

Can Chicago have a bailout too?

Wed, 14 Aug 2013 17:16:00 -0500

The idea of a federal bailout for Detroit’s broken pension funds seems to have gone nowhere with the Obama Administration. So folks here are wondering: can we get a state bailout for Chicago, which has six pension funds with $28 billion in unfunded liabilities? Is there a way to continue to allow Chicago city workers to retire as early as age 50 with full pensions — and nice cost-of-living allowances? Can we continue to let Chicago fix the salaries on which its teachers’ pensions are based — and somehow arrange for Illinois to pay the pension bill? There is a …

Five ways unions will fight Illinois pension reform

Sat, 10 Aug 2013 08:48:00 -0500

Leaders of organized labor have cobbled together a plan not only to defeat serious pension reform but also to strengthen their position.

Why a progressive income tax is a bad idea

Tue, 23 Jul 2013 12:56:11 -0500

Democratic legislative leaders in Springfield reportedly plan to propose a state constitutional amendment that would permit “graduated” rates in income taxes imposed on individuals and corporations. The proposed amendment would be put to the voters in November 2014. If approved, the legislature could then — for example — charge a 3.5 percent rate on income up to X, and 7 percent on income over X. And maybe 12 percent on income over 2X. Such “progressive” income taxation is said to be fairer because higher-income folks would pay not just more in taxes (they do that now) but higher rates than …

Why I am a Democrat

Thu, 18 Jul 2013 15:38:09 -0500

A friend recently said he was surprised that I am a Democrat. When I asked him why, he said it was because he had read some of my sermonettes on the need to reform the state’s pension systems and to create more charter schools in Chicago — both measures vehemently opposed by public employee unions. I told him I thought competitive standards and choice are just as important to Democrats as to Republicans. They are central to the American success story and to freedom. A century ago, the main threats to competitive markets in this country came from big business. …

Union pensions on a road to ruin

Thu, 20 Jun 2013 02:22:04 -0500

On Wednesday, the Illinois House and Senate created a 10-member conference committee to work out a deal on pension reform, but this changes nothing. It preserves disagreement. Reformers continue to advocate major reform — to reduce the state’s fiscal bleeding, and to save the pension systems. The unions continue to oppose real reform. So the status quo prevails. Everything is upside down here. Retirees and state workers have by far the greatest interest in getting this fixed. Younger workers are paying into plans that will be broke by the time they retire. Yet their union chiefs block the proposed reforms …

My pension deal predictions

Fri, 31 May 2013 02:23:00 -0500

Friday is the last scheduled day of the legislative session in Springfield, and — as of this writing — we do not know whether Speaker Mike Madigan’s pension reform bill, shot down in the Senate late Thursday, might come up for reconsideration. So should a columnist predict what will or may happen? Or pontificate about what should happen? Or speculate about why? Causation is generally the hardest thing to figure out. When it comes to the legislature, causation is motive. Three rules help guide analysis. First, prefer simple explanations to complex ones. Politics trumps policy: Who gets what, when, and …

Staggering debt obligations of House’s pension reform should require 60% approval

Thu, 23 May 2013 02:23:49 -0500

Representatives of organized labor in Illinois contend that the pension-reform bill recently passed by the House would be unconstitutional because it diminishes or impairs the claims of retirees. I think it’s probably unconstitutional for a very different reason. Our Legislature can spend money by simply passing an appropriation — by majority vote of both houses and with the approval of the governor. However, the framers of our state Constitution realized that the incurring of debt was more dangerous to the future of the state. So they provided that debt may not be incurred for general purposes except under tight limits …

The problem with Madigan’s pension plan

Fri, 03 May 2013 02:22:51 -0500

The pension reform bill pushed through the Illinois House Thursday by Speaker Mike Madigan has some very good things about it, but also one bad thing. On the positive side, we are told that unfunded liabilities would be reduced from about $98 billion to perhaps $70 billion. The reforms would apply to current employees — not just those hired in the future. The bill limits cost-of-living pension increases, which are costly to the state. It creates incentives for employees to retire later, which is consistent with trends in the private sector and helps control costs. It would raise the level …

Even after proposed pension fix, Illinois still would be broke

Thu, 18 Apr 2013 02:20:11 -0500

As Illinois staggers painfully toward pension reform, the suggestion appears in some news accounts and editorials that if Springfield would just pass one of the pending proposals — the Nekritz-Cross-Biss (NCB) version — then we could all breathe a deep sigh of relief. Illinois’ finances would be saved. Annual pension funding could be reduced by perhaps $2.3 billion, so the state’s financing of education, health care and safety-net programs could be restored. And Illinois could pay its bills. “Morning in Illinois.” If only it were so. 1. First, NCB is not a “settlement.” If enacted it will face a union …

Gov. Quinn’s union deal adds to our woes

Thu, 21 Mar 2013 02:22:24 -0500

Gov. Pat Quinn says he was put on earth to solve our state’s underfunded-pension problem. Yet he’s now made that problem worse. At a time when the State of Illinois is literally broke and inflation not much above zero, Quinn (who is facing a primary election next year) has agreed to give increases in pay to state employees, who on Tuesday approved the deal. These come in two main components: 2 percent increases in the last two years of a three-year contract; and “step increases” for some workers to reflect additional years of seniority. In addition, senior workers get an …

‘Balanced budget’ in Illinois is a fraud

Wed, 06 Mar 2013 02:24:05 -0500

Time for our Civics Class to come to order again. Gov. Pat Quinn on Wednesday will propose a state budget for the coming fiscal year, which begins July 1. The Illinois General Assembly will pass a budget this spring. Can anyone tell me whether our state Constitution requires that the state budget be “balanced”? [Loud guffaws! “Dumb question! Illinois runs huge deficits each year, which is why debt balances keep piling up. We owe $8 billion or so in unpaid bills. Pension funds are almost $100 billion in the hole. Our budget is the farthest thing from balanced!”] Well, then, …

Pension mess isn’t Mike Madigan’s fault

Thu, 21 Feb 2013 02:24:20 -0500

Illinois House Speaker Michael Madigan has taken a journalistic thwacking for many supposed sins — including allowing the State of Illinois to sink into a fiscal cesspool. In particular, he is allegedly responsible for allowing the state’s unfunded pension liabilities to rise to levels where they now threaten the state’s finances. The argument is roughly this: Since the 1994 pension funding law was enacted, the liabilities have mushroomed; Michael Madigan has dominated the House — and state government — throughout this period. Therefore, it must be his fault. The argument is wrong. No one person or party is responsible for …