Statewide Update—May 1, 2012

Former Mayor Richard Daley

Chicago Tribune—Pension Games: Chicago aldermen to reap millions from inflated pensions, “When Chicago aldermen floated a proposal in 1987 to boost their city pensions dramatically, Mayor Harold Washington’s administration dismissed it as an arrogant ploy that lacked even a cursory cost analysis. Three years later, the proposal still didn’t have a price tag. But records show that the new mayor, Richard M. Daley, helped push it through the state Legislature anyway. Now a Tribune/WGN-TV investigation reveals how much those lucrative pensions could end up costing taxpayers.”

Chicago Sun-Times—Emanuel: I’ll get to promised ethics fixes, “Mayor Rahm Emanuel on Monday embraced a proposed overhaul of Chicago’s anemic ethics ordinance, then struggled to explain why he has failed to deliver on a promise to give the city’s corruption-fighting inspector general broader powers and more resources. For all his efforts to draw the curtain on the scandal-scarred years of former Mayor Richard M. Daley’s administration, Emanuel hasn’t given Inspector General Joe Ferguson the authority he’s promised to investigate the City Council, the Chicago Park District or Public Building Commission. Nor has the mayor guaranteed the office one-tenth of one percent of the city’s annual budget. “

Chicago Tribune—Lawmaker pleads not guilty to bribery: ‘I will not cower’, “State Rep. Derrick Smith pleaded not guilty today to federal bribery charges and issued his first public comments after his court appearance. Smith, under pressure to resign his position, accused the FBI of engaging in ‘shenanigans’ during the investigation and said agents pressured people to ‘say bad things about me.’… Smith also suggested he will remain in office while he fights the charges.”

Daily Herald—Preckwinkle: Towns should annex unincorporated Cook County, “A task force empaneled by Cook County Board President Toni Preckwinkle is calling for municipalities to annex all unincorporated areas of Cook County to save the county money. Preckwinkle offered no timeline to eliminate the unincorporated areas where roughly 98,000 of the county’s 5.2 million residents live. Nor did she estimate what the county would save by no longer having to provide sheriff’s patrols and other services to those areas.”

Chicago Sun-Times—Former Daley aide Teele now lobbying Chicago tourism agency, “Terry Teele — a trusted adviser to former Mayor Richard M. Daley forced out in a 2000 ethics scandal — has landed a lucrative lobbying contract with the mega-agency charged with promoting Chicago as a site for conventions and tourism.  Don Welsh, CEO of the agency now known as Choose Chicago, was tight-lipped when asked why he chose Teele.”

Chicago Sun-Times—Editorial: Unwise rush to judgment on victims’ rights amendment, “Nothing that goes on in Springfield should surprise us. Yet we confess we’re scratching our heads over the Legislature’s rush to approve a victims’ rights constitutional amendment without first addressing potential pitfalls.”

Will Illinois State Lawmakers Accept Brunt of Pension Reform?

Minority Leader Tom Cross with Speaker Madigan

One of the public pension reforms being proposed in Springfield this week will have its biggest economic impact on lawmakers.

As the BGA Think Tank reported last week in “Who can Fix State’s Public Pension Crisis? Try H.G. Wells”, lawmakers, led in the Republican House by Minority Leader Tom Cross, are considering a plan requiring all current public employees to choose one of three options in regard to future retirement benefits. Employees can choose to enroll in the pension plan available to new employees, which offers a lower state contribution; they can enter a 401(k) plan; or they can keep their current benefits and contribute a significantly larger percentage of their pay to the pension fund.

It’s that final option that has had lawmakers and staff scrambling to crunch numbers in Springfield to determine just how much more employees would have to contribute.

Originally, the pension reform bill called for an increase in all employees’ contributions to 20 percent—an idea that failed to garner enough support to get either Democrats or Republicans to vote for it. So lawmakers and staff have been crunching numbers to determine how much of an increase in employee contributions to pensions would actually be required for each group of employees to make the pension system financially sound.

In our recent “Sticker Shock” investigation into Illinois public pensions, the BGA reported that many of the state’s best-known politicians are receiving in large annual pensions and that more than 10 percent have already been paid more than $1 million since retiring.

Now, according to the Capitol Fax Blog, the numbers have been released, and the actual increase in the percentage of pre-tax income that goes to pensions is largest for state legislators. According to the Blog, the General Assembly Retirement System employee contribution would increase from 11.5 percent to 24.89 percent.

Other public employees would see increases in their contributions, but none as significant as those aimed at lawmakers.

The proposal is far from a slam-dunk. Unions, who oppose the plan, point to the Illinois Constitution, which states that pension benefits for current members cannot be diminished. They are working hard under the dome and on the airwaves to fight against changing benefits for its members.

Even if a bill changing pensions for current employees passes and is signed by the governor, the American Federation of State, County, and Municipal Employees, which represents 75,000 public employees in Illinois, will likely file a lawsuit challenging its constitutionality.

While the proposal itself may not pass the legal and political muster it needs to succeed, amidst all the talk about budget slashing and shared sacrifice, it is refreshing to see lawmakers take a look at ways they can help share and alleviate the fiscal burden of our state.

Who Can Fix State’s Public Pension Crisis? Try H.G. Wells

Read the BGA’s recent three-part investigation: “Sticker Shock: Illinois’ Public Pension Crisis”

The best way to fix to Illinois’ deteriorating public pension system would be to hitch a ride on a time machine that would allow lawmakers to roll back decades of mistakes and mismanagement that produced a system at least $80 billion in the hole and going under fast.

But while the Illinois General Assembly is known to take the occasional flight of fantasy worthy of sci-fi master H.G. Wells, nobody in that legislative body has invented such a device—leaving them to concoct their own solutions to the public pension crisis.

So let’s look at some of the government pension issues and repairs being proposed by lawmakers and whether any have a chance to make it out of the General Assembly and onto the governor’s desk for a bill signing into law.