Illinois dragging its feet on huge pension problem
By SARA BURNETT | Associated Press (AP)— Illinois, a state with a reputation for political wheeling and dealing, backroom handshakes and 11th-hour bargains, is dragging its feet on the one deal needed to solve its biggest crisis in a generation.
Lawmakers will convene again the first week in January in hopes of fixing the nation's worst case of underfunding state employees' pensions, a problem approaching $100 billion and mounting by $17 million per day. On the table are solutions that other states adopted as long as five years ago.
California and New York — states that, like Illinois, lean Democratic and have strong state employee unions — already took unpopular, tough-love measures to pass pension reform.
Critics blame Illinois' situation on procrastination, budgetary "gimmicks" and frequent raids on state-employee retirement funds to pay for other state expenses. Others blame an unwillingness to take on the unions, which help keep Democrats in power in President Barack Obama's home state. But it's a problem decades in the making, through nearly a dozen Republican and Democratic governors and through legislatures controlled by both parties, dating back to before Illinois changed its constitution in 1970 to prohibit reductions in state employee retirement plans.
To many political veterans, the challenge is less a financial problem than a cultural one. They say the main reason behind the inertia is the same as what got the state into the mess in the first place: Illinois' particular adherence to the maxim that it's always easier to give than to take away, hence promising money to state employees while also spending it elsewhere.
"It's that culture of 'Where's mine?' " said Richard Dye, who contributed earlier this year to a damning, high-level assessment of Illinois' state finances, citing the famous two-word phrase that late newspaper columnist Mike Royko nominated as Chicago's motto.
Many states have pension shortfalls, caused largely because lawmakers promised teachers, police officers and other state employees healthy pensions, along with favorable retirement conditions, without putting aside enough money to cover the obligations. The shortfalls were exacerbated during the economic downturns of the last decade, which cut pension fund earnings. Retirees also live longer now and earn more in benefits.
But while some states shorted their pension contributions mainly to get through bad economic years, Illinois was remarkably consistent in shirking its full obligations, even in the best of financial times.
Pat Quinn, Illinois' current governor, says he was "put on earth" to solve the problem and that the upcoming session offers the best opportunity in his lifetime to do so. He gave lawmakers a deadline of Jan. 9, the end of a one-week legislative session when several dozen lame-duck lawmakers can vote without worrying about facing voters again.
In 2010 they did make some gains, agreeing to changes for new public employees. But a major fix — dealing with benefits to the 700,000 existing workers and retirees — has remained elusive. A 66 percent state income tax hike passed in early 2011 didn't generate enough money to make a dent in the pension shortfall.
Union officials have offered lawmakers a deal, agreeing to contribute more to their own pensions if the state makes its full contribution each year and closes some tax loopholes for corporations.
Even House Speaker Michael Madigan — who's been speaker for 27 of his 42 years in office and is considered the most powerful lawmaker in Springfield — was critical of how legislators have ducked the issue in an interview with a reporter from ABC's Chicago affiliate.