Three years ago today, the Illinois Supreme Court struck down the state’s attempt to cut its employees’ pension benefits to chip away at a retirement-system debt that’s swelled to almost $11,000 for every man, woman and child.

Since then, Illinois’s credit rating was downgraded to the verge of junk, its bonds have tumbled and its largest city -- Chicago -- was stripped of its investment-grade status by Moody’s Investors Service. And Republican Governor Bruce Rauner and the Democrat-led legislature have made no real progress toward a new plan that doesn’t violate the state constitution’s ban on reducing benefits.

“Illinois failure to address its pension crisis has resulted in further deterioration of the state and cities’ financial condition, exorbitantly high borrowing costs, and an inability to address other critical needs at the state and local level,” said Laurence Msall, president of the Civic Federation, a Chicago nonprofit that tracks state and municipal finances. “Time is not your friend when your liabilities are compounding and your revenues are not.” Read the rest of Bloomberg story.

Pensions – Illinois Supreme Court SB 1 Ruling
Illinois Supreme Court strikes down pension reform law. On Friday, May 8, the Illinois Supreme Court unanimously reaffirmed a lower circuit court ruling on State pension system reforms contained in SB 1 (P.A. 98-599). In response to enactment of P.A. 98-599, five separate actions were filed in Cook County and Sangamon County courts to enjoin implementation of the pension reforms, claiming the reforms were unconstitutional due to a violation of the provision in the Illinois Constitution (Article XIII, Section 5) that asserts pensions are a contractual right and cannot be diminished or impaired. The five suits were subsequently consolidated into one action in Sangamon County Circuit Court.

State of the State Address
Governor’s claim that Illinois has turned the corner not borne out by the facts.  Governor Pat Quinn delivered his annual State of the State Address Wednesday before a joint session of the Illinois General Assembly.  Quinn painted a rosy picture of Illinois’ fiscal and jobs outlook, claiming the state has turned the corner.

Unfortunately, the Governor’s rhetoric doesn’t match reality.  Illinois has 110,000 fewer jobs than when Pat Quinn became governor.  The labor force has contracted and the state’s jobless rate is nearly two points higher than the national average, even with a smaller workforce.  Illinois ranks dead last among all states in projected job growth for 2014.  Illinois has the 2nd largest outward migration numbers of any state in the nation, clearly indicating that people are leaving for greener pastures.

Pensions 
General Assembly enacts, Governor signs landmark pension reform bill.  SB 1, as amended by conference committee, is expected to reduce future actuarial expenses to State taxpayers by $160 billion.  These savings are subject to many future events, including the outcome of litigation to determine the constitutionality of the new law.  In addition “Tier 1” public-sector employees affected by the policy changes enacted under this statute may change their retirement plans to increase or decrease the savings the State will enjoy under this bill.   The bipartisan House vote on Tuesday, December 3, was 62-53-1.  The Senate vote of 30-24-3 sent the measure to the Governor for his signature.  The Governor signed the bill on Thursday, December 5.

by Rep. David McSweeney
Originally Published November 11, 2013 - Northwest Herald 

It’s clear that Illinois is heading in the wrong economic direction. We have a 9.2 percent unemployment rate (second highest in the country), $6 billion of unpaid bills that will continue to grow, $100 billion of unfunded pension liabilities, the worst credit ratings in the nation, and a pension crisis.

The only way to start turning Illinois around is to adopt meaningful public employee pension reform soon. We owe to it our hard-working teachers and state workers to save the pension systems.

It’s a crisis because if we don’t act soon, Illinois will continue to be plagued with high unemployment and economic uncertainty. Small businesses will not want to expand and companies will not want to locate in Illinois because they will be concerned about the prospect of higher tax rates to fund future pension obligations. More here.

Rep. Darlene Senger, Naperville

In a recent column in Reboot Illinois, Rep. Darlene Senger talks about new legislation that would keep convicted criminals from collection taxpayer funded pensions.

Believe it or not, criminals in Illinois can still legally collect taxpayer funded public pensions while behind bars. Currently in Illinois, unless the crime is related to the retiree’s job, public pensions must be paid to criminals.

For example, retired Chicago fire department lieutenant, Eugene Ornstead, was sentenced to life in prison after being found guilty of first degree murder of his wife in 1994. Ornstead’s crime was not tied to his job as a firefighter; therefore, he continues to collect a pension check from the Chicago firefighter’s pension fund.

Despite his life sentence, he still receives a pension check while incarcerated, costing taxpayers more than $55,000 a year. Reboot Illinois has the rest of the story.

Should incarcerated felons receive taxpayer funded pensions? Let us know what you think.

Taxes
House Republicans take stand against “progressive” income tax proposal.  At the end of the 2013 spring session, the Democrat majority introduced a new State constitutional amendment, HJRCA 33, for discussion.  This amendment, if it were approved by both houses and ratified by the voters, would abolish the current flat-rate income tax (the current rate is 5.0 percent on individuals) and replace it with a graduated or “progressive” income tax rate that would rise with the income of the taxpayer.  Enactment of a progressive income tax law could open the door to income tax rates much higher than 5.0 percent for many Illinoisans, and with inflation more and more households (including middle-class households) would be subjected to the higher rates.  Graduated income tax rates are higher in neighboring states which constitutions allow these rates to be charged.  For example, higher-income Iowa individuals must pay a rate of 8.98 percent.

Chicago
City of Chicago deficit will balloon to $1 billion without pension reform.  The Chicago Tribune reported this week that Mayor Rahm Emanuel will not raise sales or property taxes to close a $338.7 million budget deficit for next year. By 2015, the shortfall will balloon to $1 billion without pension reform.

In 2015, Chicago is required by state law to make a $600 million contribution to its police and fire pension funds that currently only have assets to cover just 30.5 and 25 percent of their liabilities. Chicago leaders have suggested that the Illinois General Assembly should relieve Chicago of the pension payment “ramp up” requirement and allow the City to extend payments over a longer period of time.

Chicago’s deficit will rise to $994.7 million in 2015 and $1.15 billion in 2016 without strong pension reforms and possibly new revenues.

by Rep. Jeanne Ives, in Chicago Tribune on July 12, 2013

"Illinois doesn't need just any pension reform -- Illinois needs real, measurable reform."

Illinois has an unusual weight problem. State leaders’ appetite for grease-laden power and political control has led to a $100 billion crisis that is clogging the arteries and slowing the flow of blood to the heart of Illinois. Figuratively speaking, we Illinoisans can no longer button our pants. The state could eventually collapse into an unresponsive state. A strict weight-loss regimen is necessary.

The first thing a weight-loss coach would recommend is a multipronged approach. First, we have to develop a clear vision for results — perhaps, tape a picture of our slimmer, sexier sister, Indiana, to the refrigerator — followed by psychological counseling for our addictions. Finally, our goals need to be measurable and specific.

But instead of committing to the work that needs to be done, Gov. Pat Quinn’s solution for pension reform is to merely cut out some desserts. Read the rest Rep. Ives column.

Pension Reform Conference Committee on July 8, 2013

Members of the the Pension Reform Conference Committee met for the third time yesterday to discuss options for comprehensive pension reform.

Today was the date established by the Governor to take action on pension reform. At yesterday's meeting, the Conference Committee overwhelmingly agreed that the July 9th date set by Governor was an unrealistic deadline without knowing what the Governor will accept as reform.

Testifying at the hearing were: Rep. Mike Fortner on his legislation HB 2365, Dave Urbanek on behalf of the Teachers’ Retirement System, Tim Blair on behalf of the State Retirement Systems, Jerry Stermer from the Governor’s Office, and Rich Whitney and Professor William Barclay on behalf of HB 1554 and SB 7.

At this time the Conference Committee has not set a date for the next meeting and will stand adjourned until the call of the chair.

Read more:
Rockford Register Star
News Channel 20, ABC
Capitol Fax

Budget
Human Services appropriation bill signed into law.  HB 213, which had been approved by the Illinois House by a vote of 69-47-0, became law on Friday, June 21 as P.A. 98-27.  The measure contained numerous line items for State health and human services programs, especially in the fields of medical assistance, senior living and care, veterans’ living and care, and the care of persons with mental health and developmental challenges.  The $9 billion budget was criticized by many budget experts for avoiding the hard choices that Gov. Quinn and the General Assembly majority party had earlier said they were prepared to make.  Unexpected one-time income tax receipts enjoyed by the State in April 2013 allowed the State’s “budgeteers” to allocate nearly full funding to a wide variety of social need programs.  HB 213 was one of six State budget bills that are required to be signed prior to the start of FY14 business on July 1, 2013.  Other bills, which awaited action included appropriations measures for public safety and the general operations of the State.

There was standing room only as Illinois’ pension conference committee met for the first time Thursday in Chicago. The bipartisan 10-member committee comprised of State Senators and State Representatives has been tasked with producing a compromised bill that enacts meaningful reform to the worst funded pension system in the nation. The committee heard testimony from state agencies, the business community, advocacy groups and unions who pleaded their cases and offered their positions and priorities to be read into the record.

Illinois House Republican Leader Tom Cross (R-Oswego) tapped state Rep. Darlene Senger (R-Naperville) and state Rep. Jil Tracy (R-Quincy) to serve on the pension conference committee to represent the Illinois House Republicans because of their expertise on this pressing issue. On the pension reform discussion table are topics that need to be considered that will have an impact to our state’s finances, the economy, taxes, spending and the budget. State Rep. Senger cited a

Standing room only for Day 1of
Pension Reform Conference
Committee Meeting 

representative’s remark from the Fitch credit rating agency, that Illinois currently has what is equivalent to a junk bond rating for a corporation because we have failed to enact meaningful pension reform.

Despite recent reports that the conference committee would clear the slate of previous pension proposals, most of the testimony offered yesterday was geared around components of Senate Bill 1 and the union-backed Senate Bill 2404. Senate Bill 1 has passed the House and Senate Bill 2404 has passed the Senate, but neither bill has advanced in the other chamber. It was established yesterday that Senate Bill 1 goes further in savings than Senate Bill 2404.

Governor Quinn has tasked the pension conference committee to produce a compromised piece of pension reform legislation by July 9 when session reconvenes. It remains unclear if that will happen.

The pension conference committee will reconvene in Chicago on July 3rd at 9am.

In June of this year, for the first time since December 2005, the Illinois General Assembly appointed a conference committee. The subject for this one is SB1: Pension reform legislation. That committee will meet in Chicago at 11 AM on Thursday, June 27 in room C600 of the Bilandic Building to start the steps necessary to reach consensus on pension reform. Additional meetings will likely be necessary. If agreement can be found, the conference committee will report its recommendations to the General Assembly, perhaps as early as July 8. The final step will be a vote by the entire legislative body.

The General Assembly has long been able under House and Senate Rules to appoint conference committees to resolve differences between versions of specific legislation that had passed out of the respective chambers.

Budget/Pensions

General Assembly holds special session on pension issues; appoints conference committee.  The rarely-used conference committee section of House and Senate rules enables both chambers, in the event of an otherwise insoluble impasse, to appoint ten members (six members of the majority party and four members of the minority party) to discuss how to break the deadlock.  SB 1 (Cullerton/Madigan) has been approved by both houses of the General Assembly with different answers to the State’s pension crisis.  The Senate has repeatedly turned down the House’s language, and the Senate language is characterized by many parties as not adequate to solve the crisis and has not been called in the House for a vote.  

The SB 1 Conference Committee will attempt to resolve the issue in a way that will allow the Governor to call the General Assembly back into special session with language in front of them that can gain the approval of both chambers.  The Governor has asked for new language to be prepared no later than July 9.

The pension reform impasse brought on by Democrat leaders in Springfield is costing Illinois taxpayers $17 million for each and every day a solution is not found. It is threatening the financial future of the state including the ability to provide resources to the elderly, veterans, children and our most vulnerable populations. What’s more, without reform there will not be funds available to ensure the state’s current and future retirees will have a pension at all.

Via Reboot Illinois

Illinois House Republican Leader Tom Cross said Wednesday that he believes there’s an ulterior motive behind the ongoing pension reform standoff between House Speaker Michael Madigan and Senate President John Cullerton.

Lawmakers adjourned their spring session at the end of May without approving a plan for comprehensive reform of the state’s public employee pension systems. A plan backed by Madigan was soundly defeated in the Illinois Senate, while a plan backed by Cullerton never got a vote in the Illinois House.

WBBM Newsradio Political Editor Craig Dellimore reports Cross was brief and direct Wednesday when a reporter asked him if he believes Madigan and Cullerton have been working together to keep pension reform from happening.

“Yes,” Cross said.

Seriously? Craig Dellimore has the story on CBS Chicago.

In the waning hours of the legislative session, House Republican Leader Tom Cross speaks in opposition to shifting the state's financial burden to universities and community colleges (and ultimately to Illinois families). Instead, he calls for substantive pension reform to set the state back in the right direction.

Rep. Mike Unes

By State Rep. Mike Unes from East Peoria Times
May 28, 2013

A little more than a decade ago, the state of Illinois hit a critical mass. ...(It) hit a magical point on the spreadsheet wherein taxing more led to less revenue for government instead of more. The memory of Ben Stein’s dry monotone voice explaining the Laffer Curve in the 1980s classic movie, “Ferris Bueller’s Day Off,” had faded from our collective psyche.

Government officials, unable to deal with this new reality and unwilling to address their full-blown spending addiction had hit rock bottom. Instead of getting the professional help our state needed, state officials turned to new coping mechanisms instead of treatment. The new fix was the “shift.” "Read the rest of Rep. Unes' opinion piece in the East Peoria Times.

Last week during floor debate on pension reform, Rep. Jeanne Ives questioned the bill's sponsor, Speaker Michael Madigan, on how the state got into the current pension mess. The video below is their exchange.

 

Excerpt from May 2, 2013 WSJ article, Illinois House Backs Overhaul of State Pensions:

"Ahead of Thursday’s vote, Mr. Madigan acknowledged that the pension problem flowed partly from lawmakers and governors enhancing retirement benefits over the years and not always weighing the costs of their decisions. A spokesman for Mr. Madigan said the speaker accepts his share of blame, but was one of many who contributed to the problem."