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Thursday, March 21, 2013 11:04 am

Politics, politicians and pension reform, oh my

“Pardon me,” said Ty Fahner to a nearby microphone which he had accidentally bumped during testimony to the Illinois Senate Executive Committee last week.

Fahner could probably be excused for apologizing to an inanimate object. The president of the Chicago-based, business-backed Civic Committee and self-styled pension expert had been forced to sit in the hearing room and wait for hours before testifying against Senate President John Cullerton’s omnibus pension reform bill.

Cullerton was obviously furious with Fahner for helping organize the opposition to his bill, and he grilled former Illinois Attorney General Fahner mercilessly, tag-teaming with Senate President Pro Tempore Don Harmon, who picked apart the hostile witness piece by piece. Fahner, a former attorney general, tried to remain calm, but apologizing to the mic showed how much he was rattled.

A day earlier, word went around that business leaders had been calling and emailing Republicans to pressure them to vote against Cullerton’s proposal. Even a potential Republican gubernatorial candidate got into the act.

As a result, Cullerton’s top priority for the session, the passage of Senate Bill 1, was derailed when Republicans began jumping ship.

Cullerton’s bill combines the Nekritz/Cross pension reform proposal with his own pension plan. The Nekritz/Cross measure, introduced by Democratic state Rep. Elaine Nekritz and House GOP Leader Tom Cross, allows annual cost of living adjustments for retirees only on the first $25,000 of pension income, caps pensionable salaries and provides for a pension funding guarantee by allowing systems to take the state to court for nonpayment.

The other half of Cullerton’s SB1 includes his own pension reform language, which Cullerton insists is the only constitutional way forward. That language would take effect only if the Nekritz/Cross provisions are struck down as unconstitutional. Cullerton relies on a legal concept known as “consideration.” Essentially, it means that people have to be offered a choice before the state can get out of its constitutionally mandated contractual responsibilities. Cullerton would force retirees to choose between receiving annual cost-of-living adjustments and government subsidized health insurance.

The business types, including potential Republican gubernatorial candidate Bruce Rauner and Ty Fahner, believe that Cullerton’s bill does not save nearly enough money over the long term. The Nekritz/Cross bill is expected to save several times the amount that Cullerton’s proposal will.

They also say guaranteeing that retirees will receive government subsidized health insurance premiums in exchange for giving up their cost-of-living adjustments would pretty much declare that health insurance is a contractual pension obligation, protected by the state constitution. And that, they say, would lead to much higher costs down the road.

“Bruce opposes SB1 because while it fixes one small piece of the pension crisis, it takes away key future negotiating leverage by contractually guaranteeing future government contributions,” said a spokesperson for Bruce Rauner last week. “The bill, however well-intentioned, gives away too much while not getting enough in return.”

Rauner has become somewhat infamous in Springfield the last several months for his regular email harangues of the two GOP legislative leaders and other Republicans. His vast fortune and potential gubernatorial bid have forced those leaders to pay attention.

There is more behind this opposition, however. Many in the business community believe that by putting both pension reform concepts into a single bill, the General Assembly would all but invite the courts to declare the Nekritz/Cross provisions as unconstitutional.

Even the most generous explanation of the Nekritz/Cross plan doesn’t come close to explaining how it abides by the Illinois Constitution’s declaration that pension benefits are an “enforceable contractual relationship,” and that the benefits of that contract “shall not be diminished or impaired.”

Their reasoning is that giving the courts a choice between a plan which makes almost no pretensions of being constitutional and one which at least tries to satisfy the constitutional mandate would pretty much invite the courts to strike down Nekritz/Cross. Without Cullerton’s language, the courts could be warned that they had to find a way to give the other two government branches sufficient police powers during a major crisis in order to avoid a disaster.

So, now what?

Fahner is the same guy who said last November that the pension crisis “has grown so severe that it is now unfixable.” He later backed away from those remarks, explaining that he meant the issue had become politically unfixable. But he and Rauner and their cohorts have now helped kill off what had been a politically viable plan, at least in the Senate.

Rich Miller also publishes Capitol Fax, a daily political newsletter, and CapitolFax.com.

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