Fall, the November elections and the General Assembly’s veto session are looming. But here’s a word of caution to Springfield and to taxpayers and voters: Don’t let Illinois’ pension crisis slip off your radar.
It’s a nasty, expensive problem, and there’s a cost to be paid. What remains to be determined are by whom and at what sacrifice.
The state retirement systems are underfunded by at least $83 billion. Conservatives say even that’s a rosy estimate. Further delays in payment and potential downgrades by rating services — read: higher interest rates — could drive that number as high as $140 billion. Debt service is hammering the state and will, if left unchecked, account for nearly a third of annual spending.
And despite an income tax increase of 67 percent last year, very little progress has been made. Illinois continues to slide into the financial abyss.
The August one-day emergency session of the General Assembly was a joke. With no Republican support, House Democrats threw up a show-pony vote that came up six votes short. Even had it passed, it would have addressed the smallest of the state’s five systems, which accounts for about three-tenths of 1 percent of the unfunded pension liability.
So we head into the November session with nothing certain. In fact, some would argue the odds for a solution are still long. Senate Minority Leader Christine Radogno, R-Lemont, told the newspaper’s editorial board last week that Republicans fear Democrats might try a lame-duck session stunt in January.
Essentially, those Democrats about to depart after either retiring or failing to win re-election would be free to cast any unpopular vote the majority needs while people in hotly contested districts get a pass. The GOP fears a one-party decision it says will simply transfer costs to local taxpayers. And Republican leaders say that’s a tax increase.
Senate President John Cullerton, D-Chicago, make a persuasive argument for a phased-in plan that would shift the cost of teacher retirements from the state to local school districts.
Well played, but slow down, says Radogno. She says the first thing the state must do is bring into alignment who determines the benefits and who pays them. Having the state determine the benefits only to have locals pay them is irresponsible and wrong, she says.
Further, she argues, “If you do this without doing anything else … that’s a transfer downstate. That’s a tax increase.”
At first glance, we’d have to agree. Given the state’s recent tax increases, shuffling more cost to local school districts without lessening a corresponding burden on their constituents is, in essence, a deeper grab into the local wallet.
Lawmakers and the governor also have a legal problem to get around, unionized state works point out. Article 13, Section 5 of the state constitution says, “Membership in any pension or retirement system of the State, any unit of local government or school district, or any agency or instrumentality thereof, shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.”
Teachers and other state employees have an argument when they point to a contract, a constitution and check stubs showing they’ve met their contracted share of the burden. The argument may land in court.
The state has been kicking this can down the road for decades, borrowing from tomorrow to pay for today. But, financially, the state is running out of tomorrows.
The one thing we don’t want to see is a one-party imposition of will during the lame-duck session. That party is controlled by Chicago, and the results of a power play are not likely to be kind to those of us who don’t live there.
If Democrats do ram a solution through, the large question may well become how long will voters continue to reward a party that has dominated the Legislature for the majority of three decades and led us to this point?