Miller: Some pension reform progress, but hurdles remain
By Rich Miller www.thecapitolfaxblog.com March 31, 2013 7:52PM
Updated: May 2, 2013 6:19AM
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 maybe even 30 Republican votes — half the required 60-vote majority — wouldn’t be enough to pass a reform bill.
But 41 House Democrats voted for a bill in March that severely whacked retirees’ annual cost-of-living raises. Just 25 Republicans voted for the bill — five votes less than they’ve repeatedly said they had for pension reform.
The measure would cap annual cost-of-living adjustments, or COLAs, at $750 or 3 percent, whichever is less. That change has the impact of limiting the raises to 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 or have been retired at least five years to receive their annual COLAs.
Cost-of-living raises have been targeted from the get-go as the biggest driving of rising pension costs 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 state-subsidized health insurance premiums.
Speaking of Cullerton (D-Chicago), as long as he continues to insist that the final pension bill includes his “consideration” language to ensure that at least part of the bill is constitutional (in his opinion, at least), don’t expect this House proposal to go anywhere when it arrives in the Senate.
Cullerton believes that to take away pension benefits, something has to be offered in return because the state constitution defines pensions as 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 the strategy by House Speaker Michael Madigan (D-Chicago) worked. He started with outlandish pension reforms, including one that would require employees to chip in several percent more per year from their salaries to help finance their retirements.
As Madigan’s proposals gradually became more reasonable over the weeks, they began passing. At first, the Republicans refused to participate, saying they didn’t want to get involved 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 income at $113,000. Taken together, proponents say the three proposals will save the state roughly $100 billion over the next 30 years and knock about $20 billion off the pension systems’ unfunded liability.
Some big questions remain. The huge reform bill sponsored by Rep. Elaine Nekritz (D-Northbrook), House Minority Leader Tom Cross (R-Oswego) and Sen. Daniel Biss (D-Evanston) includes some of the same reforms as the three bills that have already passed, particularly the COLA language.
But there’s also language guaranteeing state funding of its pension plans by allowing people to sue if the state doesn’t make its required payments. That provision 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 Biss-Nekritz bill nor whether he will revisit his controversial proposal to shift the pension costs for suburban and downstate teachers from the state to school districts.
And, of course, there’s also the major question of constitutionality. Reform proponents hope the courts will recognize that Illinois is in a fiscal crisis and cut the General Assembly some slack when interpreting the constitution’s specific language outlawing any reductions in pension 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 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.