POINT: ILLINOIS’ PENSION REFORM LAW (P.A. 98-599)

General Assembly finally takes action to address huge public employee obligations

    Taxpayers, employers and observers should be encouraged by what happened in Springfield last month to respond to the state’s $100 billion unfunded public employee pension obligations. It has been years in the making, but at long last the General Assembly has taken action to confront the state’s single biggest obstacle to restoring fiscal sanity to Illinois government. The adoption of new
pension laws for public employees was
a major accomplishment.
    The vote to change the pension laws was a vote to protect taxpayers.
    The pending proposal not only represented substantial change, but was acknowledged to be the best chance for success given current political circumstances. Doing nothing to affect the pension obligations was not acceptable, because it would only allow a very bad situation to deteriorate even further.
    Governor Quinn’s characterization of the growth in pension costs squeezing out the revenue that would support all other state spending obligations, such as for schools, universities, corrections, health care and human services is absolutely correct. The demands of ever-increasing pension payments have severe ramifications for other budget priorities.
    Under the new law, employees and retirees will experience future benefit reductions that amount to approximately $90 billion, primarily due to limiting growth of the annual cost of living adjustments and additional working years for younger employees. The employer’s contributions to the pension funds will be accelerated by approximately $70 billion. The combined affect coupled with continued employer and employee contributions plus earnings is expected to temper the overall pension obligation by $160 billion and reach solvency over the next 30 years.  
    The self-interest and activism of thousands of voting constituents who are personally affected by legislative actions directed towards pensions was felt by all members of the General Assembly.  Even so, Illinois’ elected leaders withstood the wrath of public employee unions and retirees in order to corral pension costs and thus reduce the future obligation of taxpayers. The fact that many elected officials of the majority party were willing to deny the wishes of one of their most important donor and voter constituencies should not be taken lightly.
    The Democratic leaders Madigan and Cullerton deserve well-earned kudos for delivering a difficult and important legislative accomplishment. However, we would be remiss if we did not single out Sen. Dan Biss and Rep. Elaine Nekritz for the exceptional efforts they put forth over many months to help bring this measure to a boil. They were among the chief legislative catalysts who energized colleagues and continuously pressed for action on pension matters.
    Governor Quinn can rightfully take claim for a major, much needed, fiscal policy victory that he has routinely and aggressively championed. On this matter he has been an unwavering pillar in the media arena. He has consistently demanded legislative action and has helped educate the public about making pension changes a priority. However, despite the governor’s prominence as chief executive and media focal point, the pension victory is primarily an achievement of members of the General Assembly.
    The action concerning Illinois public employee pensions now moves to the courts. Opponents to the law will present the argument that the Illinois Constitution of 1970 provides iron-clad protection against any changes in the benefits due public employees and retirees. A straightforward reading of the constitution suggests the argument against legislative change is strong.
    The legislature’s response is reflected in part in the law’s compelling preamble that goes into great detail describing the fiscal crisis and circumstances that requires the General Assembly to take extraordinary measures to save the pension funds and the state from insolvency.
    The Illinois Supreme Court will rule on the matter. The worst thing that can happen is that the court voids the law and offers absolutely no guidance. No one expects such an outcome.
    Unlike the gridlock in Washington that is so detrimental to the nation’s economy, Illinois’ political leaders have demonstrated that respectful, bipartisan and bicameral compromises can result in much-needed progress toward fixing and resolving major public policy issues.
    Doug Whitley is president and chief executive officer of the Illinois Chamber of Commerce.