Everyone knows that Illinois has a big problem with its pension obligations. The simple version of what happened is this: The Illinois public sector employees unions and their allies in Springfield have granted themselves far more pension money than the state can possibly pay for. So, there are no happy solutions to be found. Either the retirees get less money, or the taxpayers pay lots more money, or some combination of the above.
Politicians like to say happy things to their supporters. But the happy talk in Springfield has now stopped. Illinois’ pension obligations are now so gosh darn big that someone is going to have to come up with a way to pay them, or reduce them, or something. “Pension reform” has to happen, whatever it is, and soon.
The Illinois House and Senate knew Illinois’ pensions were in a state of crisis last year. But they couldn’t get themselves to do anything about it, and they went home in January. Then, they had the entire session this year, and Speaker Madigan and Senate President Cullerton each passed a proposed plan in their own chambers. But they did not reach a solution that could pass both houses.
So the Illinois legislature once again walked off the job on May 31, 2013, without passing a pension reform bill. Immediately, two of the rating agencies, Fitch and Moody’s, cut Illinois bond rating. Standard & Poors didn’t reduce Illinois’ bond rating because they correctly predicted that nothing was going to happen on pensions. An S&P spokesman said: “If they couldn’t do it in January, our expectation was that it would be very difficult in the regular session…They were so far apart in January, it didn’t seem consensus was likely.” S&P correctly predicted that the Illinois legislature, which failed to fix a crisis in January, would fail again to fix it in June. Illinois now has the lowest bond rating of any of the 50 states.
Governor Quinn then called for a one day “special session” to try to jam together the two bills into something everyone could live with. Not surprisingly, what could not be done in a year was not accomplished in a day.
Instead, during the one-day session, the House and Senate appointed a “conference committee.” Kicking the problem to a committee is simply kicking the can down the road one more time. But the legislature is running out of road.
The conference committee is charged with coming up with a proposal that can be passed by both houses. Governor Quinn has directed the committee to report on July 9, 2013. Rumor has it that there will be a second special legislative session on July 8, 2013.
The July 9 deadline gives the conference committee a couple of weeks to come up with a proposed pension reform bill. The assumption seems to be that the committee will produce a mishmash of the Madigan and Cullerton bills, and that the legislature will pass it, in the spirit of “doing something.”
But just “doing something” is a bad idea if it means passing either of the current bills. Neither bill will solve the problem, and some unhallowed union of the two bills will not do the trick, either. Among other defects, both bills contain a funding guarantee that would constitutionally bind the State to the payments in the bill, forever, and it would be almost impossible to change them. As hard as it is to believe, these proposed “fixes” would make the current problem worse, and harder to fix, in the future.
Rather than curse the darkness, let us light a few candles. One, small positive factor here is that there are only ten people on the conference committee. It is not that hard to send a message to ten people.
Members of the committee include the following Senators:
- Daniel Biss, D-Skokie
- Linda Holmes, D-Aurora
- Kwame Raoul, D-Chicago
- Bill Brady, R-Bloomington
- Matt Murphy, R-Palatine
Members of the committee include the following Representatives:
- Elaine Nekritz, D-Buffalo Grove
- Art Turner, D-Chicago
- Mike Zalewski, D-Riverside
- Darlene Senger, R-Naperville
- Jil Tracy, R-Quincy
If you click on the links for each legislator’s name, there is a message asking each committee member to reject the Madigan plan, the Cullerton plan, or any combination of the two. Instead, the conference committee should propose a bill based upon House Bill 3303 and Senate Bill 2026.
HB 3303 was introduced by state Reps. Tom Morrison and Jeanne Ives, and SB 2026 was introduced by state Sen. Jim Oberweis. If this program were adopted, it will, among other things, cut the Illinois’ unfunded pension debt in half and will put in place a defined contribution plan which will be funded on an ongoing basis.
Rep. Morrison recently wrote:
I was sworn into office over two years ago, and the unfunded pension liability then was $86 billion. Back then, newspapers across the state rightly called for major and immediate reforms. Today, the pension reform bill that’s being lauded as “real reform,” the Madigan bill, simply rolls back our unfunded pension liabilities back to 2010 levels. This was a time when we still had a pension crisis! Who would call that progress? We must adopt a plan that actually moves us much farther down the road to fairness for all parties and long-term predictability and sustainability.
Rep. Morrison correctly states that HB 3303/SB 2026 will move Illinois toward “long-term predictability and sustainability.”
G.K. Chesterton once accurately wrote: “I’ve searched all the parks in all the cities and found no statues of committees.” Committees rarely show initiative or courage. Defying Speaker Madigan and the Illinois public employees unions would require both.
But history provides at least one important example of a committee acting bravely and decisively.
After the American Revolution, the thirteen states had a national government organized under the Articles of Confederation. The Articles were not working, and the country was unable to pay its bills or defend itself. It was a crisis and major change could not be delayed any longer.
The states decided to form a committee to revise the Articles. That committee, soon after it convened, realized that the Articles could not be salvaged. So the committee went into secret, closed session, and did something radical and unexpected: It wrote the Constitution of the United States.
A similar miracle is unlikely in this case. But, then again, miracles are always unlikely.
There is no harm in asking the conference committee to act with courage and realism, to put the good of the Illinois and its people in first place, and propose a genuine solution to Illinois’ pension crisis.
So lets ask them.