Home / Articles / Commentary / Politics - Rich Miller / Where your state pension sits now
Print this Article
Thursday, April 4, 2013 11:04 am

Where your state pension sits now

As it turns out, the Illinois House Democrats didn’t need the Republicans to put 30 votes on a significant pension reform bill.

There’s been worry for at least two years that the Democrats would have to rely heavily on the Republicans to get anything out of the chamber and that may be even 30 Republican votes – half the required 60-vote majority – wouldn’t be enough to pass a pension reform bill.

But 41 House Democrats voted for a bill in March that severely whacked retirees’ annual cost of living increases. Just 25 Republicans voted for the bill – five votes less than they’ve repeatedly said they had for a significant pension reform proposal.

The measure would cap annual cost of living raises at $750 or 3 percent, whichever is less. That change has the impact of limiting cost-of-living raises to only the first $25,000 of annual pension income. Anyone who makes less than $25,000 would continue to receive compounded increases until the cap is hit.

The proposal also forces retirees to wait until they are either 67 years old or have been retired at least five years to receive their annual cost-of-living adjustments.

Cost-of-living raises have been targeted from the get-go as the biggest pension cost driver. Every major piece of pension reform legislation has included at least some limits on the COLAs. Senate President John Cullerton’s proposal, for instance, would take COLAs away entirely, but only if retirees elected to continue having access to government subsidized health insurance premiums.

Speaking of Cullerton, as long as he continues to insist that the final pension reform bill includes his “consideration” language to ensure that at least part of the legislation is constitutional (in his opinion, at least), then don’t expect this House proposal to go anywhere when it arrives in the Senate. Cullerton believes that in order to take away pension benefits, something has to be offered in return because the Constitution deems pensions a solemn contract that cannot be diminished nor impaired.

Anyway, it turns out that this pension reform thing wasn’t so difficult after all. Maybe House Speaker Michael Madigan’s strategy worked. He started with outlandish pension reform proposals, including one to require employees to chip in several percent more per year for their retirements.

As Madigan’s proposals gradually became more reasonable over the weeks, they began passing. At first, the Republicans refused to participate at all, saying they didn’t want to participate in a “piecemeal” process. But they have been voting on the measures for the past few weeks.

Three significant bills have passed the House so far, including the one mentioned above. The other two would raise the retirement age and cap pensionable incomes at $113,000. Taken together, proponents say the three proposals will save the state $100 billion over the next 30 years and knock $20-21 billion off the systems’ unfunded liability.

Some big questions remain. The huge pension reform bill sponsored by Rep. Elaine Nekritz, House Republican Leader Tom Cross and Sen. Daniel Biss includes some of the same reforms as the three bills which have already passed, particularly the COLA language. But there is also language guaranteeing state funding by allowing people to sue if the state doesn’t make its payments, which has suddenly picked up opposition from some business groups and Republican gubernatorial candidate Bruce Rauner. There’s no word yet on whether Madigan will allow a vote on the full Nekritz bill, nor whether he will revisit his proposal for a far more robust cost shift plan.

And, of course, there’s also a question of constitutionality. Reform proponents say they hope the courts will recognize that Illinois is in a crisis and cut the General Assembly some slack when interpreting the Constitution’s very specific language outlawing any reductions in benefits. But that’s pretty much the same argument used when the General Assembly approved medical malpractice reform bills that ended up being shot down by the courts. So, we’ll see.

Either way, some truly heavy lifting was done in the House, at least as far as retiree benefits go. Madigan’s reform bill received 66 votes, six more than needed for passage. So the topic is apparently not as radioactive as many had feared, or threatened, depending on your perspective. And Madigan clearly showed that he can do this without relying on the Republicans to come up with 30 votes.

Rich Miller also publishes Capitol Fax, a daily political newsletter, and CapitolFax.com.
Log in to use your Facebook account with
IllinoisTimes

Login With Facebook Account



Recent Activity on IllinoisTimes

Calendar

  • Thu
    16
  • Fri
    17
  • Sat
    18
  • Sun
    19
  • Mon
    20
  • Tue
    21
  • Wed
    22