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Pension reform legislation put on hold, gambling expansion approved

Caption
(AP photo)
House Minority Leader Tom Cross testifies Thursday during a House Pension committee hearing at the state Capitol in Springfield.

SPRINGFIELD – State lawmakers will return this summer to address pension reform after an attempt to pass a bill in the last day of the spring legislative session fell short.

House Minority Leader Tom Cross, R-Oswego, said Thursday evening he would not call for a vote on a pension reform bill passed through committee earlier in the day. Cross said he shelved the bill at the request of Gov. Pat Quinn, who said he plans to bring back lawmakers this summer for more work on the issue.

At the core of Senate Bill 1673 is a choice for most employees in four of the five state-run pension systems who were hired before 2011. Teachers, university professors, state employees and legislators would have to choose between taking lower annual cost-of-living adjustments and having access to state health insurance, or giving up the insurance and keeping the annual 3 percent COLA.

The fifth state-run system covering judges was left out of the legislation in an effort to increase the legislation’s odds of surviving a court challenge – judges would get to rule on their own lawsuit, which they did when then-Gov. Rod Blagojevich attempted in 2003 to take away their 3 percent COLA.

Lawmakers did approve a major expansion of legalized gambling for the second year in a row. But there's little indication last year's roadblock — Gov. Pat Quinn — is willing to let it through this time.

The Senate voted 30-26 late Thursday in favor of a proposal that would create five new casinos — a land-based site in Chicago and four more on riverboats.

It also would allow for the first time slot machines at horse racing tracks. That ailing industry wants additional opportunities to bring in gambling dollars.

The bill could produce at least $300 million in tax revenue for the state annually. Proponents say that could go as high as $1 billion a year, not counting a one-time infusion of more than $1 billion from licensing and a special tax.

Critics argued that the state gambling market is saturated and that new casinos would just take business away from the 10 existing ones approved two decades ago.

Lawmakers also completed work on a new state spending plan Thursday. It took two tries for the Illinois Senate to approve a budget for elementary and secondary education that contains a number of cuts from the current budget.

The education bill negotiated by Republicans and Democrats in the House cuts education spending below the current budget and reduces general state aid to schools and money for preschool programs and free and reduced-price breakfasts and lunches.

Senate Democrats said the budget lives within the $33.7 billion estimate of general state revenues that is the basis of spending limits approved by both Democrats and Republicans in the House earlier this year. The Senate didn’t adopt those limits, but passed the House budget based on them anyway.

Lawmakers have been working to restructure benefits for the state-run pension systems, which have least $86 billion in unfunded liabilities. But even with the removal of a controversial provision that would have shifted teacher pensions to local property taxes, reforms were in doubt throughout the day.

The bill hit a major snag Thursday afternoon. House Speaker Michael Madigan, D-Chicago, said he would not vote on it, the day after he handed over sponsorship to Cross. Madigan’s version included shifting teacher pensions for downstate and suburban teachers to local property taxes, which many lawmakers feared would prompt significant tax hikes.

The version approved by a House committee Thursday did not include the controversial provision, but included language that would make school districts and universities – meaning local taxpayers – responsible for pension costs incurred by generous pre-retirement raises.

With the spring legislative session now done, any bill requires a three-fifths majority, or 71 of 118 votes, to pass rather than the 60 needed for a simple majority.

As of press time Thursday night, state Rep. Mike Tryon, R-Crystal Lake, said a date for the upcoming “pension session” was undetermined. But he expects it “sooner than later.”

“(Cross) said this will be a summer project, not a fall project,” Tryon said. “I think the Attorney General should weigh in on this and it should be vetted more on the financials.”

Previous pension reforms put employees hired since Jan. 1, 2011, into a tier of their own. Their retirement age for full benefits was raised to 67, their COLAs are capped at half the rate of inflation or 3 percent, whichever is smaller, and the maximum salary on which their pensions can be based is the Social Security limit of $106,800.

A lawsuit by public-sector unions would object to changes on constitutional grounds. It’s written in the Illinois Constitution that state pension benefits “shall not be diminished or impaired.”

There are legal opinions on both sides of changing pensions, and supporters of reform have said that a court challenge may be the only way to settle the matter.

While judges average the highest pensions, their unfunded liability totals about $1.3 billion, or only about 1.5 percent of the state’s $86 billion unfunded liability.

• The Associated Press and GateHouse News Service contributed to this report.

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