No matter how you cut it, $100B pension debt is a crisis
It was worrisome this week to hear Senate President John Cullerton characterize Illinois’ staggering pension problem as something less than a crisis.
Speaking with WGN Radio in Chicago on Oct. 20, Cullerton, a Democrat, said the shortfall is not an imminent crisis and that some business interests want to make it seem that way because they want lower income taxes.
“Let me also just say that people really misunderstand the nature of this whole problem. Quite frankly, I don’t think you can use the word crisis to describe it at the state level,” he said during the interview, noting that Chicago’s pension problem is more serious than the state’s.
Cullerton is partly correct, and we know there are those who agree with his general sentiment.
Illinois’ pension crisis is not as dire as the city of Chicago’s, and, no, the ink is not drying on Illinois’ bankruptcy papers (because Illinois technically can’t declare bankruptcy).
But is that where we’re drawing the line on deciding what’s a crisis — by seeing just how close the state can get to insolvency and comparing its problems to Chicago’s?
In a lot of people’s estimation, the state hit the crisis level some time ago when it became impossible to juggle outstanding bills and the pension debt.
Unless the legislature’s pension reform conference committee presents a workable plan to lawmakers soon, the situation will continue to unfold and worsen.
The taxpayers, bond houses and newspaper editorial pages recognize the gravity of the matter.
So do the vendors, service providers and school districts that go unpaid for months at a time because the state spends so much of its money covering its pension debt.
It’s tough to hear any Illinois lawmaker characterize the state’s nearly $100 billion unfunded pension liability as anything but a crisis.
But in the end, we don’t need semantics; we need solutions.
The bipartisan conference committee of lawmakers working on pension reform since June has come up with a framework for reform, but it currently is on hold for further analysis.
The committee is split on the plan, which reportedly saves $138 billion during the course of 30 years.
It reduces 3 percent annual compounded cost-of-living adjustments on retirement benefits for state workers to half the rate of inflation.
And it reduces employee contributions by 1 percent — a concession that could make the proposal more likely to withstand a legal challenge on constitutional grounds.
Republicans have asked for additional savings in the form of increasing the retirement age and giving workers a 401(k)-style option for retirement funds.
History being what it is, it will be surprising if lawmakers have a chance to vote on the pension proposal before the end of the fall veto session, which means the crisis will languish into next year when lawmakers return to Springfield.
While legislators continue hammering out the details, let’s remember one thing: Illinois taxpayers — the ones stuck dealing with a pension debt that grows by $5 million every day, according to Gov. Pat Quinn’s office — are the ones who get to decide what is or isn’t a crisis in this state.
— GateHouse Media Illinois