A group of frustrated state lawmakers presented their own attempt at fixing the state’s underfunded pension crisis, setting the stage for a possible showdown during the lame-duck session in January.
House Pension Committee Chairwoman Elaine Nekritz, D-Northbrook, unveiled the proposal along with more than 20 colleagues on Wednesday, the last day of the fall veto session. Supporters call House Bill 6258 an attempt to jump-start much-needed reforms in the wake of inactivity on the part of legislative leaders.
“We must continue to push this issue forward and not let excuses get in the way of progress,” Nekritz said.
The state-run pension systems for the General Assembly, state employees, state universities, teachers and judges are underfunded by at least $94 billion, the worst shortfall of its kind in the nation.
House Bill 6258 seeks to reduce the 3 percent cost-of-living increase for retirees. It also would raise the retirement age for younger workers and require them to contribute more to their respective pension systems. It also includes the controversial provision sought by Gov. Pat Quinn and other leaders to shift the burden of teachers’ pensions to local school district property taxes.
The cost shift alone makes the bill a deal-killer for state Reps. Mike Tryon and Jack Franks. Although they applauded the lawmakers’ initiative, they said they have many concerns with the bill as presented. And both lawmakers said they highly doubt tinkering with existing benefits will survive a court challenge – the Illinois Constitution says that public-sector pension benefits “shall not be diminished or impaired.”
Tryon, R-Crystal Lake, said a plan to allow employees to keep their accrued benefits to date and alter what they accumulate going forward would stand a much better chance of survival.
“The [cost-of-living adjustment] needs to be negotiated and revised, because I think it’s a loser on its face in court,” Tryon said.
A failed attempt at pension reform in the final days of the spring session intentionally left out judges in an effort to increase the odds of surviving a challenge. When former Gov. Rod Blagojevich tried to take away their 3 percent COLA in 2003, the judges not only sued, but also got to rule on their own case.
Nekritz said that a provision of the bill guaranteeing that pension obligations will be met, and therefore eliminating the risk of insolvency, could help sway the Illinois Supreme Court.
For employees hired before 2011, the bill would apply cost-of-living adjustments to only the first $25,000 of an employee’s pension, or $20,000 for employees who are eligible for Social Security. It also would increase the retirement age by one to five years for workers 45 years old or younger, and increase workers’ contributions to their retirement by 1 percent the first year and 2 percent each following year.
The last successful attempt at meaningful pension reform came in 2010 with a bill that limited pension benefits on all new hires as of 2011. The law raises their retirement age from 60 to 67, caps the amount from which their benefits can be calculated to the Social Security cap of $106,800, and limited cost-of-living increases to the lesser of half the rate of inflation or 3 percent. But the new limits were not imposed on state workers hired before 2011.
Franks, D-Marengo, got to review the bill Sunday, but told Nekritz and other supporters that he cannot support the cost shift, which under this bill would be phased in slower than in previous proposals. Opponents of the shift contend that the shift will increase suburban property taxes at a time when residents’ bills are increasing despite depressed home values.
“I thanked them for their initiative in trying to do something without going through leadership and the governor’s office,” Franks said.
Franks and other lawmakers repeatedly have accused Quinn of a lack of leadership in addressing the pension crisis. Although he vowed that pension reform is his top priority, local lawmakers were not impressed with his November launch of a social media campaign aimed at building public support for a fix, complete with a cartoon mascot named Squeezy the Pension Python.
Tryon and Franks said they are concerned over what could become law in the hectic days of the lame-duck session before the Jan. 9 swearing-in of the new General Assembly, when the number of votes needed to pass legislation reverts back to simple majority and outgoing lawmakers can vote on controversial legislation without worrying about re-election. Lawmakers in the 2011 lame-duck session approved the largest income-tax increase in Illinois history, abolished the death penalty, and approved civil unions.
The “yes” votes of 12 lame-duck lawmakers were vital to raising the state income tax 67 percent on individuals and 46 percent on businesses. Six of those lame-duck lawmakers have since ended up with government jobs and pension-boosting salaries – there are 35 state lawmakers leaving office next month.
The revenue generated by the tax increase, sold by supporters as a way for the state to catch up on billions in unpaid bills, instead has been swallowed by the state’s pension obligations.
The Nekritz bill comes a month after voters rejected a complicated, 700-word constitutional amendment aimed at requiring a three-fifths vote for state and local lawmakers to sweeten pensions. It has been more than a decade since state lawmakers last approved a pension sweetener, and with all but a handful of opposing votes.
On the Net
You can read the text of House Bill 6258 on the General Assembly’s website at www.ilga.gov.
