A controversial but significant overhaul of Illinois' ailing state-run pension systems is on its way to Gov. Pat Quinn after barely squeaking through both houses of the General Assembly.
In a landmark Tuesday vote, the House and Senate approved a bill aimed at saving the systems by reining in annual cost-of-living increases and raising retirement ages. Senate Bill 1, which undoubtedly will be taken to court over its constitutionality by the state's powerful public-sector unions, passed 30-24 in the Senate and 62-53 in the House. Quinn congratulated lawmakers after the vote and pledged to sign the bill as soon as he received it.
House Speaker Michael Madigan called the legislation a "well thought-out, well-balanced bill" at the start of House debate. He and the three other legislative leaders – Senate President John Cullerton, House Minority Leader Jim Durkin and Senate Minority Leader Christine Radogno – finished hashing out the bill last week after a 10-member committee from both houses tasked with creating a long-needed fix fell short.
"Something's got to be done. We can't go on dedicating so much of our resources to this one sector of pensions," Madigan said.
The five state-run pension systems for suburban and downstate teachers, rank-and-file-state employees, judges, university employees and General Assembly members are underfunded by at least $100 billion.
More than 20 percent of the state's current 2014 budget is going to pay the state's pension obligations, which have swallowed almost all of the revenue from the 67 percent income tax increase that lawmakers imposed in 2011. Bond rating agencies routinely cite legislative inaction on pension reform in its repeated downgrades of Illinois' credit rating, which now is the lowest of all 50 states.
The bill will save an estimated $160 billion over the next 30 years with the aim of fully funding the pension systems by 2044.
Under the plan, the 3 percent COLA retirees get still will be compounded, but only off of a base salary of $1,000 for each year an employee works, plus the rate of inflation. The COLA will skip some years on a sliding scale based on state workers' current age – employees at least 50 years old will only miss one increase, while those 43 and younger will miss five, spaced out every other year.
The plan also raises the retirement ages for employees 45 years or younger by four months for each year an employee is younger than 46, for a maximum of five years, and imposes a cap on pensionable income on all employees.
Workers get some concessions under the bill. They will pay 1 percent less into the pension systems, which will be able to sue the state should it not make its required payments. Years of repeated shorting of those payments, or not making them at all, is one of the primary causes of the current pension crisis.
Sen. Linda Holmes, D-Aurora, reminded lawmakers of that fact during debate. She was part of the 10-member committee in charge of coming up with a reform bill, and the only one to vote against it.
"I think a lot of this problem stems from the fact that we actually didn't do what we were obligated to and should have done," Holmes said.
Senate Bill 1 does not make changes to the retirement system for judges in an obvious attempt to improve the legislation's chances of survival. When former Gov. Rod Blagojevich tried stripping judges of their 3 percent COLAs, they sued, got to hear their own case, and won.
Public-sector unions, which bombarded lawmakers in the days prior to Tuesday's session, lashed out after the vote and promised a court battle. They allege it runs afoul of language in the Illinois Constitution which states pensions "shall not be diminished or impaired."
"This bill will rob working people of their life savings. It is unconstitutional, and so won't save a dime," Illinois Federation of Teachers President Dan Montgomery said after the vote. "Don't be fooled by anyone who calls this a solution. All they have done is sent this fight for justice to the courts."
The politically sensitive nature of the important vote was evident in its very timing. It came the day after the filing deadline to run in the 2014 election, which gave lawmakers an idea going into session of what competition they will face. It passed by the minimum number of Senate votes needed, and two more than is needed in the House.
McHenry County's lawmakers were split about evenly on the bill. Sens. Pam Althoff, R-McHenry, Karen McConnaughay, R-St. Charles, Rep. Barbara Wheeler, R-Crystal Lake, and Rep. Tim Schmitz, R-Batavia, voted yes.
"By reining in our pension obligation, we will soon have more funding available for the critically important budget areas like education, services for Illinois’ most vulnerable and poorest citizens, unpaid bills and other state priorities. These are all budget areas that have been shortchanged for far too long," Wheeler said.
Voting no were Sen. Dan Duffy, R-Lake Barrington, and Reps. Jack Franks, D-Marengo, Mike Tryon, R-Crystal Lake, and David McSweeney, R-Barrington Hills. McSweeney, an investment specialist and former investment banker, said the savings numbers did not add up. He asked Madigan during the debate for an analysis by the state's nonpartisan Commission on Government Forecasting and Accountability, but Madigan said no.
"I couldn't make the numbers work. They didn't add up to me. If these numbers are wrong, then the entire bill is flawed," McSweeney said.
The bill is a political victory for Quinn, an unpopular governor in the polls who faces a tough re-election battle next year. Only one of the four main GOP gubernatorial candidates, Sen. Bill Brady, R-Bloomington, backed the reform.
"The fact of the matter is we're dealt the hand we have today and we have to act upon it," Brady said.
Fellow gubernatorial candidate Sen. Kirk Dillard, R-Hinsdale, voted against it, although his lieutenant governor candidate, Rep. Jil Tracy, R-Quincy, voted for it in the House. Treasurer Dan Rutherford, like Dillard, said the bill will not pass constitutional muster, and venture capitalist Bruce Rauner, whose campaign centers on playing tough with unions, called it inadequate.
"Springfield politicians today voted to slap a small bandage on an open wound. While it may help them temporarily feel better, it does little to fix the real problems facing Illinois," Rauner said in a statement.
• The Associated Press contributed to this report.
How they voted
Senate Bill 1, which overhauls Illinois' state-run pension systems, passed 30-24 in the Senate, where local Sens. Pam Althoff, R-McHenry, and Karen McConnaughay, R-St.Charles, voted yes, and Dan Duffy, R-Lake Barrington, voted no.
It passed on a 62-53 vote in the House, where Reps. Barbara Wheeler, R-Crystal Lake, and Tim Schmitz, R-Batavia, voted yes, and Reps. Jack Franks, D-Marengo, Mike Tryon, R-Crystal Lake, and David McSweeney, R-Barrington Hills, voted no.
On the Net
You can read a copy of the bill and see how lawmakers voted at www.ilga.gov.