The pension sweeteners are just a tiny portion of the state’s current problems. As noted here many, many times, including earlier today, the real problem has been the deliberate funding neglect.
For the Tribune to now argue for funding flexibility is just insane, and shows how little that editorial board actually knows about how we got here.
“Pardon me,” said Ty Fahner to a nearby microphone that he accidentally bumped into during his testimony last week before the Illinois Senate Executive Committee.
Fahner could probably be excused for apologizing to an inanimate object. The president of the Civic Committee of the Commercial Club of Chicago and self-styled pension expert had been forced to wait for hours in the hearing room before testifying against Senate President John Cullerton’s pension reform bill.
Cullerton (D-Chicago) was obviously furious with Fahner for helping organize the opposition to his bill, and he grilled the former Illinois attorney general mercilessly — tag-teaming with Senate President Pro Tem Don Harmon (D-Oak Park), who picked apart the hostile witness piece by piece.
Fahner tried to remain calm during his appearance, but apologizing to the mic showed how much he was rattled.
A day earlier, word went around that business leaders had been calling and emailing Republicans to pressure them to vote against Cullerton’s proposal. Even an apparent Republican gubernatorial candidate, venture capitalist Bruce Rauner, got into the act.
As a result, Cullerton’s top priority for the legislative session, the passage of Senate Bill 1, was derailed when Republicans began jumping ship.
Cullerton’s bill combines the Nekritz/Cross pension reform plan with his own. The Nekritz/Cross measure, introduced by state Rep. Elaine Nekritz (D-Northbrook) and House Minority Leader Tom Cross (R-Oswego), allows annual cost-of-living adjustments for retirees only on the first $25,000 of pension income, caps the salary on which a pension can be based and provides for a funding guarantee by allowing the state’s five pension systems to sue the state for not making payments to their funds.
The other half of Cullerton’s bill includes his reform language, which Cullerton insists is the only constitutional way forward. That language would take effect only if the Nekritz/Cross provisions are struck down as unconstitutional.
Cullerton’s bill relies on a legal concept known as “consideration.” Essentially, it means that people have to be offered a choice before the state can get out of its constitutionally mandated contractual responsibilities.
Cullerton would force retirees to choose between receiving annual cost-of-living raises or having the state pay for their medical insurance.
The business types, including Fahner and Rauner, believe Cullerton’s bill does not save the state nearly enough money in pension costs over the long term. The Nekritz/Cross bill is expected to save several times more.
The business leaders also say that guaranteeing that retirees get government-paid health insurance in exchange for giving up their cost-of-living raises would declare that health insurance is a contractual pension obligation protected by the Illinois Constitution. And that, they say, would lead to much higher costs down the road.
“Bruce opposes SB 1 because while it fixes one small piece of the pension crisis, it takes away key future negotiating leverage by contractually guaranteeing future government contributions,” said a spokesperson for Rauner. “The bill, however well-intentioned, gives away too much while not getting enough in return.”
Rauner has become somewhat infamous in Springfield the last several months for his regular email harangues against Cross, Senate Minority Leader Christine Radogno (R-Lemont) and other Republicans. His vast fortune and potential run for governor next year have forced those leaders to pay attention.
There is more behind this opposition, however. Many in the business community believe that by putting both pension reform concepts into a single bill, the General Assembly would enable judges to declare the Nekritz/Cross plan as unconstitutional.
Even the most generous explanation of the Nekritz/Cross plan doesn’t come close to explaining how it complies with the state Constitution’s declaration that pension benefits are an “enforceable contractual relationship” and that benefits “shall not be diminished or impaired.”
The reasoning of the business groups is that giving judges a choice between a plan that makes almost no pretensions of being constitutional and one that at least tries to pass muster (Cullerton’s) would lead to Nekritz/Cross being struck down.
So, now what?
Fahner is the same guy who said in November that the pension crisis “has grown so severe that it is now unfixable.” He later backed away from that remark, explaining that he meant the issue had become politically unfixable.
But he and Rauner and their cohorts have now helped kill off what had been a politically viable plan, at least in the Senate.