Bill Knight – March 21
Wed March 20, 2013
Proposals and Polls about Pension Reform
Most Illinois House members recently backed a measure to limit the salary on which public employees’ retirement benefits could be based. One of a few proposals to address the state’s $96 billion pension shortfall, it was seen as a test vote as lawmakers grapple with some way to make good on years of the legislature failing to make its payments.
Two Republicans joined Democrats in a 65-7 vote supporting the amendment, which would cap the salary that pension benefits are based on at the limit set for Social Security, currently $113,000 a year. Supporters say it could save Illinois $1 billion a year.
Forty-three Republicans refused to vote, protesting the process.
Meanwhile, most Illinois voters overwhelmingly oppose cutting public employee pensions, according to a new survey by the independent Public Policy Polling, which found that 31% favor cuts but 58% are against them.
The idea of a pension cap, part of a bill sponsored by Rep. Elaine Nekritz, a Northbrook Democrat, and House Republican Leader Tom Cross of Oswego, would apply only to current employees who haven’t reached that pay level. Anyone already earning $113,000 or more annually would still be eligible to receive a pension based on the higher salary.
A House committee may consider the full bill any day, a Cross spokeswoman told the press.
The Senate also plans to return to the issue. Senate President John Cullerton, a Chicago Democrat, has said there will be committee actions on his pension plan soon. His bill combines Cross and Nekritz’ legislation with a measure he hoped is constitutional because it would offer retirees a choice of benefits, although attorneys he consulted say it’s unconstitutional.
Labor’s We Are One coalition supports Senate Bill 2404, which contains a funding guarantee, dedicated revenue to pay down the state's pension debt, and shared sacrifice. Retirees who paid in their part during their working years would not be punished. Its 19 sponsors include Bloomington Republican Bill Brady and Moline Democrat Mike Jacobs.
In the PPP survey, most Illinoisans said that the pension issue was caused by “wealthy people and corporations” not paying their “share” rather than by the size of public employee pay and pensions, with 50% agreeing with the statement and 34% disagreeing.
Illinois AFL-CIO president Michael Carrigan said, “Illinois voters are sending a strong message to their political leaders. The public doesn’t believe that the modest pension of a retired teacher or other public employee caused the budget problems.”
According to the poll, people in the state say the pension debt and ensuring pension funding crisis stems from the legislature “skipping pension payments” rather than overly generous pension benefits; 64% blame “politicians” for avoiding required pension funding and 27% don’t.
Illinois voters also oppose cutting pension Cost of Living Adjustments (COLA) – by a 60%-31% margin.
Elsewhere, Deputy Majority Leader Lou Lang, a Skokie Democrat, announced his proposal, which raises the retirement age for state workers and makes the 2011 state income-tax increase permanent.
His House Bill 2375 would continue the 2011 increases of personal income tax from 3% to 5% and corporate income taxes from 4.8% to 7%. That tax, set to expire at the end of next year, would fund the payments the state needs to make to catch up with the pension deficit the legislature created over years.
Lang's proposal also sets retirement age at 67 and shifts teacher costs over several years to the school districts that grant them. It also would offer taxpayers a $1 billion-a-year rebate beginning in 2020, the year a decade-old bond sale to raise pension-fund money is paid back.
Other plans by Representative Nekritz and Governor Quinn have included other cost-saving measures, including increased worker contributions and reduced benefits.
PPP’s poll shows bi-partisan support for holding government, not employees, accountable for the condition of the pension funds. State government skipping its pension payments is the chief culprit of the funding problem, Illinoisans say, with Democrats agreeing with the phase “overly generous benefits are not the cause” 71%-19%, Republicans 59%-35%, and independents 62%-30%.
Bill Knight’s newspaper columns are archived at billknightcolumn.blogspot.com
The opinions expressed are not necessarily those of Tri States Public Radio or Western Illinois University.
Still No Agreement
Bill Knight - September 6
Cuts to Benefits