Sometimes it is helpful to try to understand current affairs by analogy to the great works of cinema. For example in Godzilla vs. Megalon (1973), Tokyo is threatened by Megalon, and surprisingly, the previously destructive monster Godzilla comes to the aid of the poor helpless humans. Of course as the monsters fight, the humans and their buildings get stomped on and wrecked by both of them. It barely matters which monster is the good guy, or the bad guy. Monsters step on buildings. That’s how it is. Such is the bitter, ironic lesson of this superficially childish film.
In Illinois we are currently being treated to a conflict between two of the biggest politicians in Springfield, Mike Madigan and John Cullerton. Each of them has a proposal for what they claim is “pension reform.” Each would have us believe that he is Godzilla, defender of the citizenry, and the other one is Megalon. And, as in the classic film, the ordinary people are going to get stepped on no matter which monster is the lesser of two evils.
Mike Madigan has now introduced his own plan for pension reform. It is a rewrite of the bill that Senate President John Cullerton has already gotten passed in March. Unless you are full time professional lobbyist, you will not have the time or the stamina to read the entire Madigan Bill, which weighs in at a meaty 277 pages. So, Speaker Madigan has kindly made available a handy Cliff Notes-style two-pager. (For a more objective summary, see Madigan’s pension plan would perpetuate Illinois’ crisis from the Illinois Policy Institute.)
Madigan’s two-page summary lists fourteen provisions in the Madigan bill, which are all merely tweaks to the existing system, with various cuts to benefits, tinkering with the cost of living increases, and increases to the retirement age. Madigan’s plan will, supposedly, bring the state pension systems to 100% funding in thirty years. The State of Illinois cannot be counted on to stick to anything for thirty years, let alone any form of spending discipline. Remarkably, the Madigan plan provides that the pension plans can, and must, bring lawsuits to compel the legislature to fund pensions in the future. Plenty of conflict over enforcement of any pension reform is an expectation we share with the Speaker.
Madigan’s plan differs from Cullerton’s mainly by leaving out a provision that would require state retirees to choose between either a compounding 3% annual cost of living increase, or state-funded health care. The point of this, according to Cullerton, is to avoid running afoul of a provision in the Illinois Constitution, Article XIII, Section 5, which 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.
Cullerton is taking this language strictly, as Illinois public employees unions want him to do. So, he would argue, by offering retirees this choice, Cullerton’s bill does not “diminish or impair” the pension “contract” because there is no constitutional right to health care benefits, and retirees are getting something in exchange for giving up their cost of living increases. This may sound like a lot of legalistic rigmarole, and it is, but the point is that Cullerton wants to preserve the strongest possible reading of the Constitutional guarantee, so that he can to benefit his union allies. As a result, the unions have so far backed Cullerton’s plan, and opposed Madigan’s.
Madigan seems to be counting on a broader reading of the Illinois Constitution to make his plan acceptable. He will be asking the courts to read Article XIII, Section 5 to say that benefits “shall not be diminished or impaired … unless it is reasonably necessary to do so to prevent the state from going broke.” Whether the Illinois Supreme Court will find these invisible words if Madigan’s plan passed is pure guesswork at this point. But he is apparently betting that way. (A helpful discussion of the Constitutional issue can be found here.)
In the meantime, the only realistic pension reform proposal, that had a real prospect of transforming the current, doomed pension system into a viable and affordable defined contribution plan, has been shunted aside, at least for now.
If something can’t go on, it won’t. The Illinois pension system cannot go on, and these huge conflicts over small tweaks won’t change that. Despite all the noise and drama of the clashing monsters, neither plan does anything to end the pension crisis. The Illinois taxpayer will remain on the hook for an unsustainable system, and pensions will increasingly crowd out essential services like education, health care for the poor, and public safety. Illinois will just have a bigger mess to clean up when the dust settles and this round of “reform” fails, as it inevitably will.
Under either plan, the taxpayers of Illinois are just going to get stepped on, as usual.