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Avoiding distractions biggest issue facing pension committee?

Tuesday, Aug 20, 2013 - Posted by Rich Miller

* Rep. Elaine Nekritz talked with WBBM about the pension reform negotiations

“What I think you’re seeing is some frustration that the conference committee – the bipartisan bicameral conference committee – is not making as rapid process as I think that many would like, and I would agree with that,” Nekritz said. “But the fact is we are making progress, and everybody at that table – and by everybody, I mean all four caucuses – remain very committed to getting something significant done.” […]

For the first time, all four caucuses are agreeing on some pension reform measures.

“We are all coming together in good faith, and negotiating, and these negotiations are very delicate,” she said. “But this is the first time that all four caucuses have been at the table, agreeing on anything with regard to the pension situation.”

* She said pretty much the same thing to Illinois Public Radio

* Sen. Bill Brady, a member of the conference committee, expressed some frustrations, but also some optimism

State Sen. Bill Brady (R-Bloomington) said the committee that’s trying to find a solution to the state’s pension crisis takes two steps forward and one step back.

Gov. Pat Quinn used his veto power to suspend state lawmakers’ pay because of their inaction on Illinois’ pension crisis. He halted lawmaker pay after a committee he commissioned failed to come up with a pension solution by a July deadline.

Brady said he thinks the Democrats are frustrated with Quinn.

“Clearly the pushback from the Democrats is, they don’t want to give him a win on this, and it has not helped the environment at all,” Brady said. […]

“I’m afraid the Democrats may want to see a judge call the governor’s actions unconstitutional before they really move seriously on this. That may be a reality, we’ll see,” Brady said. […]

Brady said, though, he’s is hoping the committee can get something to the legislature before Labor Day.

* Raw audio of Brady’s interview…

* But Sen. Daniel Biss said the governor’s veto is being ignored by the committee

“There’s a huge amount of atmospherics outside,” says Biss, “and, so far, I think, we’ve done, internally, a good job of ignoring it and trying to work on the actual goal at hand and let other people worry about all the other considerations.” Those “atmospherics” would include speculation that the governor’s tactics have steeled lawmakers – particularly his fellow Democrats – against him. […]

Biss insists the governor’s decision last month to veto lawmakers’ pay is not a distraction: “A lot of people in America don’t have a paycheck right now,” he said.

* Rep. Nekritz agrees

“I’ve talked with a number of my House colleagues over the last two weeks. Nobody has said to me, (a) we are not willing to vote on it, and (b) we want you to do something different on the conference committee because of” wanting to embarrass the governor.

Do you believe them?

       

38 Comments
  1. - RNUG - Tuesday, Aug 20, 13 @ 12:54 pm:

    What I believe is the committee is making gradual progress on a plan. Whether it is constitutional or not is a whole other question; to hit the numbers they publically claim to want to hit, it almost has to diminish existing pensions.

    I also believe we won’t see that plan until after the legislative pay issue gets resolved, and even then it may still be delayed.

    Part of the behind the scenes delay could be waiting to see how the talk of revenue enhancement, specifically a graduated income tax, is playing in Peoria and elsewhere. If that is gaining sme traction, the pension plan may incorporate it as their funding source.

    Of course, in Quinn’s case, he would probably prefer a little less talk and a lot more action.


  2. - Obama's New Puppy - Tuesday, Aug 20, 13 @ 1:02 pm:

    Not really, there are plenty of legislators that are deeply concerned about the precedence this will have if they move before this issue is decided. The conferees are saying what they have to at this point.


  3. - Federalist - Tuesday, Aug 20, 13 @ 1:14 pm:

    Those counting on a graduated income tax to solve the state’s fiscal problems are, I believe, barking up the wrong tree. It would take a CA to do this and I do not believe it will pass. For those who think I am wrong, please explain. We have had state income tax hikes already. Always to be used to fund education but actually to fund Medicaid and now pensions as well. In short, no serious member of the public trusts any taxation increase/shift.

    Furthermore, even it were to pass, it will not solve the pension issue. With several hundred thousand more being added to the already 2.8 million on Medicaid there is not enough money in the state treasury to finance this. Yes, I know that for now the FEDs will soak up most virtually all the costs. But that will diminish in the future and could get much worse if ACA is slowly strangled or future FED political leaders decide they have had enough and ship ever more of the costs back to the states. And don’t think this could not happen.

    The state has over $32.5 billion in state revenue (not counting road funds) and another $30 billion in Fed dollars. But there is never enough money.

    As to the Pension CC, it is apparently stacked with those who want to diminish pensions in anyway they can. And Nekritz/Brady represent the bi-partisan support in this. They could care less about the Constitution. They will pass what they can and throw it to the courts. The only stumbling block may be in the Senate, which at least in the past, has not supported the Madigan proposals.


  4. - MOON - Tuesday, Aug 20, 13 @ 1:26 pm:

    This problem is not going to be resolved for a long, long, long time.

    I do not see a resolution until such time that funds for all other State Services are squeezed to the point that voters apply real pressure on the lawmakers.

    Cullerton’s plan is nothing more than a band-aid; after a year or two the State will be in the same position they are currently in.

    Madigan’s plan goes a long way towards solving the problem. Unfortunately, the Senate does not have the will or stomach to see it through to the end.

    Cullerton’s and Madigan’s plans both have constitutional issues. Having said that, why not go with the one that will do the most good…… Madigan’s Plan


  5. - Fred L. - Tuesday, Aug 20, 13 @ 1:33 pm:

    There is some truth to everything each one of them is saying. They are making progress and from the best I can tell, the members of the committee are ignoring the outside noise. But I also think a number of GA members — particularly the leaders — have adopted the mindset Brady is talking about. They don’t want to give Quinn a victory.

    Pity the poor member of the GA that don’t have side jobs or wealthy spouses…I don’t think they have a voice on the conference committee or in leadership. Which is why Quinn’s pay cut isn’t really having an impact.


  6. - Bobbysox - Tuesday, Aug 20, 13 @ 1:37 pm:

    The fact that seems to escape most people is that the Cullerton Plan would have passed both chambers with supermajorities. And with those that represent the bulk of those affected on board with the plan, it likely would have been found constitutional. The only person that stopped it from happening was Mike Madigan. Who the Committee is negotiating with is almost ludicrous.
    The plan that does the most good isn’t the one that does the most harm to public employees. It is the one that will be found constitutional. The Committee’s plan is merely an academic exercise in kicking the can down the road as it almost assuredly will be overruled by the IL Supreme Court.


  7. - Demoralized - Tuesday, Aug 20, 13 @ 1:48 pm:

    ==They could care less about the Constitution. They will pass what they can and throw it to the courts.==

    I don’t think they “could care less about the Constitution.” I think they realize that something has to be done to the pensions besides throwing up their hands and saying they can’t do anything because somebody or another believes it violates the Constitution. But I do agree that they know whatever they pass will have to be “thrown” to the Courts. I, for one, would welcome that happening because I’m frankly tired of this pension issue hanging over my head. I DO NOT want my pension reduced, but I also want some sort of decision because this uncertainty is not good on anybody.


  8. - Rufus - Tuesday, Aug 20, 13 @ 2:01 pm:

    The pension issue is not the problem. The problem is the GA spending more than what comes in and using the State’s pension financial obligation to pay for the GA’s excesses.

    Until the GA controls their budget, there will be more financial problems.


  9. - RNUG - Tuesday, Aug 20, 13 @ 2:26 pm:

    To expand on my thoughts, I think the people on the pension committee are smart enough to know they can’t get around the constitution; maybe nibble at the edges some but nothing blatant.

    Changing the AAI (COLA) from a flat 3% might pass muster, but only if it went to straight CPI with no cap, so that way any reduction in low inflation years would be offset by a new enhancement in high inflation years. Can’t see the State agreeing to writing a blank check on that; the 3% was picked to ensure predictability, but it might happen. Short term, that would let the State lower their AAI assumption in the formula, giving the appearance of savings.

    The committee also knows, as Federalist points out, that the public doesn’t trust the GA to use any revenue increase for whatever the excuse is, so any standalone income tax bill is DOA. But the committee can read the budget numbers the same as everyone else. They KNOW the State needs additional revenue to meet all the commitments the State has made, which includes the pension payments. There HAS to be a permanent tax increase to offset the coming sunset of the temp tax.

    I’m guessing the result will be one of those bills everyone will hate. It will include a tax increase with a specific amount or percentage of the increase dedicated to pension funding, it will include some level of diminishment, and may well bundle the whole thing into one insuperable bill where the diminishment doesn’t happen unless the tax increase is enacted. If that tax increase was to be a graduated tax, then that would mean voter approval of a constitutional amendment before the diminishment took effect.

    I’m also thinking there is no real desire to get any of this out of the committee or the GA until after the primary next spring. Let’s face it, there is a political element to all this also. If someone’s estimate that 1 in 5 people in the State with be directly or indirectly affected by any pension reductions is correct, that’s a whole lot of manpower that would normally be part of GOTV. If you’re messing with their pensions, I don’t think those people are going to show up supporting you on election day. If that is a consideration, then the GA pay suspension by Quinn doesn’t really matter except to the legislators with no alternative income.

    Or I could be all wrong, nobody cares about the political implications, and the committee comes up with a bill by September that hits the numbers they want to free up for other spending, and it just gets tossed into the courts. Then we get to watch the whole train wreck happen a second time.


  10. - Norseman - Tuesday, Aug 20, 13 @ 2:30 pm:

    NO. To modify a Judge Judy saying, you can tell if a politician is lying by watching if his/her lips are moving.


  11. - Anon. - Tuesday, Aug 20, 13 @ 2:31 pm:

    ==Until the GA controls their budget, there will be more financial problems.==

    And, if the Supreme Courts say they can stiff the retirees, they can stiff anyone. Including bondholders, as I hope the Civic Federation realizes.


  12. - Chris - Tuesday, Aug 20, 13 @ 2:50 pm:

    “It will include a tax increase with a specific amount or percentage of the increase dedicated to pension funding”

    A surtax (1%? 2%?) for pension funding, applicable in any year where the aggregate funding ratio was below X% (90? 95?) in any 2 of the prior 3 years would seem to make sense. Maybe scaled so that it’s 1% if below 95, but above 90, 1.5% from 85-90, 2% below 85. With the appropriate amount of periodic payments funded straight to the pension boards.

    Gives it an automatic sunset, but *ALSO* keeps the screws on to avoid underfunding.


  13. - jake - Tuesday, Aug 20, 13 @ 2:55 pm:

    I believe them, because none of them are trying to make political points by trashing any of the others in public statements. Remarkable especially when you consider that one of them is running for Governor and another is seriously thinking about it.


  14. - JC - Tuesday, Aug 20, 13 @ 2:55 pm:

    ==one of those bills everyone will hate==

    That would be in the true spirit of “shared” sacrifice.


  15. - Federalist - Tuesday, Aug 20, 13 @ 3:37 pm:

    No graduated income tax will survive.

    But the 5% income tax is here to stay.

    At least that is what I predict.


  16. - RNUG - Tuesday, Aug 20, 13 @ 3:57 pm:

    Federalist @ 3:37 pm:

    If it stays a flat tax, 5% is only enough to tread water for a couple of years. The State isn’t going to be able to live on an austerity budget for the next 10 to 20 years it will take to nibble away at their backlog while making the currently scheduled tax increases. Even if the pension committee successfully diminishes the pensions enough to wipe out over half the unfunded obligations, simple program growth / inflation elsewhaere in the State budget will have us right back here in between 2 and 3 years. If the committee includes a TRS cost shift, that might buy another year or two if they don’t change the school formula. There’s going to have either be a higher flat rate, or a new tax of some kind, such as a sales tax on services. One way or the other, the State needs more revenue than they are pulling in today if they want to put a dent in the payment cycle.


  17. - RNUG - Tuesday, Aug 20, 13 @ 3:59 pm:

    correction - should have read pension increases, not tax increases


  18. - Mama - Tuesday, Aug 20, 13 @ 4:04 pm:

    “There HAS to be a permanent tax increase to offset the coming sunset of the temp tax.”

    I totally agree with Rnug.


  19. - Fed up - Tuesday, Aug 20, 13 @ 4:20 pm:

    Quinn said the tax increase was temporary, surly he wasn’t lying.


  20. - Federalist - Tuesday, Aug 20, 13 @ 4:22 pm:

    RNUG,

    You are correct and that is the problem.

    So why is the state adding up to an estimated 700,000 to the Medicaid roles? This is beyond and reason. If the Medicaid expansion was for children only, I could understand but that is not the case. In order to qualify you must have children and then parents qualify. Ummmm. Think about that.

    Of course, right now everything is being blamed on the pensions. I expect that to continue as it is the new PC from both Left and Right.

    Again, I seem to be the only one pointing out the obvious reality of how Medicaid has already busted the bank and now is being expanded. No politician, union, or individual seems to face this reality with a an open honesty.

    I do not expect that to change although I hope I am wrong


  21. - RNUG - Tuesday, Aug 20, 13 @ 4:38 pm:

    Federalist,

    You are dead on target that several federal programs, including Medicaid, were some of the programs partially financed (state match) with the money that should have gone in the pension funds. And in 3 years 10% of the cost of that Medicaid expansion bill is going to come home to roost. And immediately there is going to be a big cost to the State because about 1/2 of the expected enrollees are people already eligible who never signed up, and the Feds won’t pay 100% for them.

    Do we even want to talk about all the low income workers being cut back to


  22. - RNUG - Tuesday, Aug 20, 13 @ 4:41 pm:

    And actually, the Medicaid expansion also covers low income w/o kids …


  23. - Federalist - Tuesday, Aug 20, 13 @ 4:53 pm:

    RNUG,

    You are right about the new coverage, that is a change.

    And while I pick on Medicaid, the state also could stand a little scrutinizing on many of the capital projects in this state and some $896 million (state/federal) spend on day care.

    A lot of room for real analysis of the states’ finances, but I don’t see an Conference Committees on these and other budgetary areas.


  24. - pensioner - Tuesday, Aug 20, 13 @ 5:06 pm:

    Every dollar spent over budget is excess. Why is it then that pension, actually protected by the Constitution, is the culprit? This is, has, and will continue to be such much foolishness. Re-ramp going forward. That is all they can legally do.


  25. - pensioner - Tuesday, Aug 20, 13 @ 5:07 pm:

    *so*


  26. - CircularFiringSquad - Tuesday, Aug 20, 13 @ 5:25 pm:

    Still waiting for the list of PQ “yes” votes….

    People should get the word “victory” out of the equation. While there might be a bill that eases the problem it is unlikely anyone will be cheered at the torchlight parade


  27. - Anon. - Tuesday, Aug 20, 13 @ 5:31 pm:

    ==Quinn said the tax increase was temporary, surly he wasn’t lying.==

    For a minute, I thought that was a spelling error.


  28. - Mr. Keynes - Tuesday, Aug 20, 13 @ 6:32 pm:

    It will be temporary…in geological terms.


  29. - Soccermom - Tuesday, Aug 20, 13 @ 6:42 pm:

    Classy comment by Biss. He’s a full-time legislator with a young family, and he can’t be enjoying life without a paycheck — especially since he’s put so many hours into finding a pension solution. Nicely played, Dan.


  30. - Anon - Tuesday, Aug 20, 13 @ 7:55 pm:

    The politicians expanded too many programs and used the money due pensions to pay for them. Now they will have to cut back on new spending and pay the money they owe to the pensions.


  31. - Holdingontomywallet - Tuesday, Aug 20, 13 @ 8:55 pm:

    ” Now they will have to cut back on new spending”….

    That will never happen with this group of politicians. They will look for new sources of revenue, unfortunately - taxes. Forget about growing our economy or attracting businesses to Illinois, not on their radar. It looks like they will raise taxes again and drive more people and businesses out of the state. Brilliant.


  32. - I might b wrong, but.. - Tuesday, Aug 20, 13 @ 9:51 pm:

    Soccermom, agree with you that Biss is a class act, but I think he’s still a prof at U of C.


  33. - fake county chairman - Tuesday, Aug 20, 13 @ 11:01 pm:

    I am with rufus.Maybe the comm. will decide they are the problem.Take the issue at IDOT and all the expensive new patronage jobs that were created at the demise of highway maintainers.


  34. - fake county chairman - Tuesday, Aug 20, 13 @ 11:18 pm:

    Illinois has hit a new low. Forming a comm. to take the food off pensioners tables.One person on that comm. was worth over a billion dollars with the family bus. they own .DOT foods.


  35. - RNUG - Tuesday, Aug 20, 13 @ 11:48 pm:

    The nine most terrifying words in the English language are, ‘I’m from the government and I’m here to help.’ — Ronald Reagan

    “We have met the enemy and he is us.” — Pogo (Walt Kelly)


  36. - Bobio - Wednesday, Aug 21, 13 @ 12:04 am:

    Blah, Blah Blah they know hard decisions have to be made and they can’t make them because they can’t get the votes. It ain’t gonna happen by committee


  37. - Old and In The Way - Wednesday, Aug 21, 13 @ 12:22 am:

    Anyone, legislator, reporter, or pundit who says that Governor Dufus’s stunt is not having an effect on the conference committee simply knows nothing about Illinois politics or the leadership in the GA. Do you actually think that the Speaker is going to let PQ not only get a cheap win but set a legislative precedent that will haunt him and the GA in the future? What you are seeing is the GA, both parties, close ranks to protect the institution. Sure, they are working on a plan or a fix, but it won’t see the light of day until the pay issue is resolved.

    As for the graduated income tax. I find it curious how some can ignore the constitution in regard to the pension protection clause but find the constitutional “protection” from the graduated income tax sacred! If you buy the justification for diminishing pensions by fiscal necessity (police powers) might the same justification be used to enact a graduated income tax? And if not, why?


  38. - aroundhere - Wednesday, Aug 21, 13 @ 10:25 am:

    I agree with others that the 5% income tax is here to stay. Which I don’t think is a bad idea, since 5% is still a very low amount of state tax.

    Not sure one would need a graduated income tax. Perhaps the best way to do this is to remove many of the subtractions to income that are currently in the IL income tax. For example, on schedule M, #32 and #33 (certain bonds). Perhaps the exemptions could be phased out with a certain income. What about schedule 1299-C (excluding the dependent care subtraction). How about a surtax on income above a certain amount? I like the idea of taxing financial transactions.


Sorry, comments for this post are now closed.


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