Ill. Lawmakers Reach Deal on State Pension Crisis

It’s too soon to see if there’s
anything for Illinois taxpayers to be thankful about, but lawmakers
on both sides of the aisle in Democrat-controlled Illinois have
announced a deal to manage the state’s massive unfunded pension
liabilities.
From the Chicago Tribune:

Top Illinois legislators said today they’ve reached agreement on
a plan to deal with the state’s worst-in-the-nation unfunded public
pension liability and expect to vote on it next week.

Details of the measure were unclear today and its prospects of
passing remained  uncertain. But both Democratic and
Republican leaders said they agreed on a proposal, the first such
sign of progress in more than two years of discussions spurred by a
continued downgrading of the state’s credit rating.

The debate has centered on how to reduce costs while balancing
the legal protections to public employee retiree benefits laid out
in the state constitution. The public employee unions have
repeatedly threatened to challenge in court any pension proposal
that lacked their support, and they were quick to criticize today’s
announcement.

Though the Tribune doesn’t have full access of the
deal’s contents, here’s what they were told:

[Senate Republican leader Christine] Radogno said the proposal
would save about $160 billion and the goal is to fully fund the
pension system over the next 30 years.

The proposal would raise retirement ages, create an optional
401(k)-styled plan and scale back the cost-of-living increases.

Increasing the retirement age, now set at various levels based
on the type of work, would impact the youngest workers the most.
Younger workers could see up to five years added to their
retirement ages, Radogno said.

The cost-of-living adjustments would be altered “to be sure that
the lower-paid, longest-serving employees have the biggest
protection,” said Radogno.  It would be largely patterned
after a provision she pushed and was included in a bill that
Speaker Michael Madigan passed in the House.

Union officials, despite not knowing what’s in the full plan
yet, put out a statement that the proposal was unfair and
unconstitutional. Democratic Gov. Pat Quinn supports the plan.

There will be a special one-day session on Dec. 3 to vote on the
proposal. The Tribune notes that the date of the vote
comes the day after the filing deadline for the March 2014 primary.
Suggested, but not stated outright: Democrats will know if they’re
going to face union-funded primary challengers before they
vote.