Ill. Legislature fails to reach pension deal
SPRINGFIELD – Illinois lawmakers failed again Friday to fix the state’s nearly $100 billion pension crisis – inaction that will put increasing pressure on the state’s already disastrous financial situation.
Gov. Pat Quinn and legislators had said addressing the nation’s worst state-pension problem was their top priority in the 2013 session. But the Democratic-controlled House and Senate passed rival proposals – each backed by their chamber’s leader – and were unable to agree on how to move forward.
Late Friday – the last day of the legislative session – a spokeswoman for Senate President John Cullerton said the Senate wouldn’t take any more pension votes, leaving it up to the House to pass reform before the session’s midnight deadline. About an hour later, the House adjourned without a pension vote.
Both Cullerton and House Speaker Michael Madigan pledged to continue working toward an agreement.
“I don’t think we should take a lack of success today as a reason to give up,” Madigan said.
Leaving town without a resolution means soaring pension payments will continue to squeeze Illinois’ budget. The inaction also could prompt credit rating agencies to further downgrade the state’s credit rating, which already is the lowest of any state in the U.S.
The failure also could pose political problems for Quinn – who has said he was “put on earth” to solve the pension problem – as the Chicago Democrat eyes a re-election bid.
Illinois’ five public employee retirement systems are about $97 billion short of what’s needed to pay benefits as currently promised, largely because lawmakers skipped or shorted their payments for years. The full annual payment in 2014 will be about $6 billion – nearly one-fifth of the state’s general revenue fund.
If the Legislature doesn’t take action by 2016, the governor’s office estimates the state’s pension payment will be larger than the amount spent on education.
For years, lawmakers have been unsuccessful in solving the growing problem, even as other states have approved legislation to deal with their own crises.
This year’s failure came down to a difference of opinion between Madigan and Cullerton, both Chicago Democrats, on how best to address the problem. Madigan wanted a comprehensive pension bill that cut benefits across the board. Cullerton favored giving employees and retirees a choice in benefits – an approach he said was the only one that would survive a court challenge.
Public employee unions, which threatened to sue if Madigan’s bill passed, lobbied hard for Cullerton’s approach, saying they wanted a deal that would not only uphold the state’s promises to workers and retirees but also stabilize the pension system.
The Senate acted first, approving in committee legislation sponsored by Cullerton in March that included both approaches: one as the primary legislation, the other as a “backup” in case the Illinois Supreme Court deemed the first unconstitutional.
Cullerton said he wanted to send a clear message to the New York bond houses that Illinois could agree on at least a piece of the puzzle. He also wanted to send a test case to the court. But the business community and other critics lobbied against the bill, saying it didn’t save Illinois enough money. Despite a few changes, the legislation arrived in the House with little chance of being passed.
In late April, Madigan announced he was stripping Cullerton’s language and replacing it with his own comprehensive bill. The measure cut cost-of-living increases, raised the retirement age and required employees to pay more toward their own retirement.
Madigan and other supporters said it would save the state more money than Cullerton’s plan. But public employee unions said it violated a provision of the state constitution that says pension benefits cannot be diminished.
Shortly after the House passed Madigan’s bill in early May, Cullerton and the unions announced they had come to an agreement on a separate measure that would give workers and retirees a choice in pension benefits.
Cullerton called Madigan’s bill for a Senate vote late Thursday, where it failed. Cullerton said he knew the support wasn’t there, but thought Madigan’s legislation deserved a vote.
“I wish he’d do the same for me,” Cullerton told The Associated Press.
That was wishful thinking: The vote never came, and the House adjourned.
In a statement, Cullerton said the Senate “has spoken repeatedly and consistently on pension reform.”
“To date the Senate has worked to pass five different pieces of legislation designed to reform our systems within the confines of the constitution,” he said. “Not one of these plans was brought to the House floor for a vote.”
To take up the issue again, either Madigan and Cullerton or Quinn could call for a special legislative session to take up the issue.
But brokering a deal could be more difficult during a special session because it would take a three-fifths majority to pass legislation, rather than a simple majority.