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.

Statewide Update—Jan. 18, 2011

• Southtown Star (AP)—Tax credit is incentive to hire temporary workers, “Gov. Pat Quinn has signed legislation providing a $2,500 tax credit to employers hiring trainees from the Put Illinois to Work temporary jobs program.”

• State Journal-Register—Thousands hired in Illinois ahead of new pension system, “Thanks to the eight-month span between Gov. Pat Quinn’s approval of a pension reform bill last spring and its implementation Jan. 1, any public worker hired in Illinois as late as Dec. 31 was enrolled in a far more lucrative pension plan than those hired after that date.”

• Chicago Sun-Times—Black wards adding more voters, while Hispanic wards lag behind, “In just 10 weeks since the November midterm elections, every ward in the city showed a jump in the number of registered voters, indicating a high level of interest in the upcoming mayoral contest.”

• WBEZ—Cook County commissioner wants family hiring ban, “The county government has long had a reputation for nepotism. Recently  Assessor Joe Berrios hired two relatives soon after he took over the office.”

• (Gatehouse News Service) Peoria Journal Star—State Comptroller informed that 38 appointees not confirmed, “The Senate of the 96th General Assembly did not confirm any of the listed persons… With their nominations no longer valid, I am unaware of any legal authority permitting the formal nominees to continue to draw a salary or receive expense reimbursements.”

• Peoria Journal Star—Durbin changes stance on death penalty, “U.S. Sen. Dick Durbin, the second-ranking member of the U.S. Senate, said Monday he has come to believe that states should not impose the death penalty.”

• Chicago Tribune—State Sen. Lou Viverito of Burbank resigns, “Sen. Lou Viverito’s resignation was effective Saturday, though the 78-year-old from Burbank remains the Stickney Township supervisor, a job he has held for about 35 years.”

• Chicago Sun-Times—Quinn, former state rep. say job not traded for tax-hike vote, “During her final days in office, former state Rep. Careen Gordon scored a lucrative state job after casting an important vote that helped pass Gov. Quinn’s controversial 67 percent income tax increase.”

• Daily Herald—LeBlanc off ballot in Campton Hills but still in race, “Kristin LeBlanc plans to run as a write-in candidate for Campton Hills village president after the village clerk declined to put her on the April ballot because her nominating petitions were incomplete.”

• Center Square Journal—Ald. Schulter drops reelection bid; aims for County Board of Review, “Schulter has served as alderman since 1975. Rumors of his retirement have swirled since November, when a political ally of Schulter filed to run for alderman.”