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Excuses abound

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Illinois

* Here’s the hard, simple truth about pension reform, or anything for that matter: Nothing difficult ever gets done unless House Speaker Michael J. Madigan pushes his members to vote for it. Period. End of story. And, so far, MJM is not working his members.

The Tribune chronicles a list of excuses…

Many in the House did not want to take up a controversial issue when the Senate isn’t even around to consider it. Some Democrats refused to commit to voting for the plan when they didn’t know how many Republicans also were willing to stick out their necks.

Others stood against any pension changes. Some who were willing to entertain a new approach criticized the proposal as too harsh on public employees and retirees. Still others contended the proposal violates a state constitutional prohibition on diminishing or impairing public employee pensions, as union officials have maintained. […]

And then there are the outgoing lame-duck lawmakers. While those who lost in November or are retiring are politically insulated from facing the voters again, they aren’t eager to use their last minutes in public office to vote for a proposal that would reduce their own retirement benefits.

But the easiest blame was cast upon absent state senators and their leader, Senate President John Cullerton, D-Chicago.

“There are a number of people who are talking about the Senate,” said Rep. Elaine Nekritz, D-Northbrook, a sponsor of the pension measure, which advanced earlier Monday from a House committee on a 6-3 vote. “But those are some of the people who, if not the Senate, also would have found another excuse.”

* And I’m not sure that this interpretation is correct…

If lawmakers don’t meet their deadline Wednesday, the General Assembly can start again. About three dozen new lawmakers will be sworn in Wednesday for the new session.

“I don’t think we need to start over from scratch,” Nekritz said. “This is a piece of legislation that has had the most bipartisan support and the most momentum behind it.”

The Senate has actually passed a pension reform bill - twice. However, it has little support in the House, so far.

* Sun-Times editorial board…

We have said the Nekritz bill is constitutionally suspect, though its sponsors can muster some compelling arguments. Despite that, it gets our backing because it is the only comprehensive bill in play. Cullerton’s bill, which passed the Senate in May, only covers two of the five state pension systems, generating only about one-third of the needed savings. Though a better bet constitutionally speaking, any bill is a gamble given protections in the state Constitution.

But the Senate Democrats contend that a bill as unconstitutional as the Nekrtiz/Cross proposal would upset ratings agencies even more. Check the bottom of Page 1 of this document, for example.

posted by Rich Miller
Tuesday, Jan 8, 13 @ 9:46 am

Comments

It seems to me that Nekritz really believes that the Supremes could be persuaded to allow changes in the pension benefits because of the state’s current financial problems. Nothing is written in the sky, but this seems like a huge assumption to me, especially since the state has other options. So her approach seems a bit naive.

She’s an interesting political figure now. Whether the bill passes or not, what will her political future be? A future leader by virtue of her pension reform efforts. Or gone in the next election.

Comment by cassandra Tuesday, Jan 8, 13 @ 9:52 am
==We have said the Nekritz bill is constitutionally suspect, though its sponsors can muster some compelling arguments.==

I have never heard one.

Comment by Anon. Tuesday, Jan 8, 13 @ 9:54 am
It should upset the ratings agencies because the only other major contract the state has is to its bondholders and if trashing contracts is that easy why pay bondholders? After all Nekrtiz says we have a fiscal crisis

Comment by western illinois Tuesday, Jan 8, 13 @ 9:55 am
If you read the referenced letter to the end, the next to last paragraph on page 3 is VERY enlightening as to the thinking about the health insurance.

Comment by RNUG Tuesday, Jan 8, 13 @ 9:59 am
I suspect your thinking will prevail over his RNUG but we shall see…..anyway the house completely dissed his plan last night.
Nekrtiz better have the most expensive legislative primary in the history of the United States

Comment by western illinois Tuesday, Jan 8, 13 @ 10:08 am
It would be a huge mistake to pass any bill that you know will be overturned. Work within the system or change the system legally. I am tired of our elected leaders on both the state and national levels trying circumvent the constitutions because we are in a “crisis.”

Comment by Fan of the Game Tuesday, Jan 8, 13 @ 10:11 am
As cassandra has eluded to above, Nekritz understands they think can get away with this. In other actions the state has taken against its employees, the IL 7th Circuit and 4th Appellate Courts have ruled that the state doesn’t have to follow its own administrative rules or previous commitments and in at least one instance affirmed by the IL Supreme Court.
If they are be able to get away with this scheme, this could only be the beginning since there is no evidence that this will generate the $96 billion of they seek.

Comment by Crime Fighter Tuesday, Jan 8, 13 @ 10:13 am
Magical thinking must be the only thing that keeps Nekritz and Quinn going. The pension short sheeting as a budget gimmick has run out. The middle of a bad economy is not the time to tackle putting the pensions at 100% funding for the first time.

Comment by Liberty_First Tuesday, Jan 8, 13 @ 10:14 am
@RNUG, CMS with power to change health insurance coverage on a whim? Frightening!

Comment by Fan of the Game Tuesday, Jan 8, 13 @ 10:17 am
Well said Rich. Without the Speaker’s hard push, really difficult things don’t fly. No matter how good and strong Nekritz is, and she’s both, she doesn’t have the Speaker’s leverage of supporting some individual legislators’ campaigns.

In this case though, given some unmovable votes, even that wouldn’t be sufficient — Cross co-sponsors the bill then doesn’t push his own caucus members to commit either?

Nekritz is respected by her peers now, on many issues. Whether she will be named to an official leadership role, if she even wants that, remains to be seen.

Comment by walkinfool Tuesday, Jan 8, 13 @ 10:20 am
Well, yes, but there is a big difference between not following an admin rule and not following the state constitution. Again, I think Nekritiz’ thinking may be on the naive side.

Comment by cassandra Tuesday, Jan 8, 13 @ 10:21 am
The sound of silence is truly deafening.
And the winner is…MJM

Comment by Madison Tuesday, Jan 8, 13 @ 10:26 am
Amendment 11 is out there now.

Looks like it puts everything in SB1673 off limits to any union bargaining or arbitration rulings.

And here’s the biggie, BONDS AHEAD OF PENSION PAYMENTS!

“Any payments required to be made by the State pursuant to
3 this subsection (c) are expressly subordinated to the payment
4 of the principal, interest, and premium, if any, on any bonded
5 debt obligation of the State or any other State-created entity,
6 either currently outstanding or to be issued, for which the
7 source of repayment or security thereon is derived directly or
8 indirectly from tax revenues collected by the State or any
9 other State-created entity. Payments on such bonded
10 obligations include any statutory fund transfers or other
11 prefunding mechanisms or formulas set forth, now or hereafter,
12 in State law or bond indentures, into debt service funds or
13 accounts of the State related to such bonded obligations,
14 consistent with the payment schedules associated with such
15 obligations.”;

Comment by RNUG Tuesday, Jan 8, 13 @ 10:35 am
I find myself agreeing with Cassandra more on this issue than on most others. The state constitution is supposed to be a big bleepin’ deal. As a close-to-retiring non-union state worker I’m hoping it still is.

Comment by DuPage Dave Tuesday, Jan 8, 13 @ 10:38 am
Cassandra is right, also, even if a constitution amendment were managed, there is still contractual law to deal with and Illinois Supreme Court rulings prior to the constitutional protection favor the “annuitants” The claims of constitutionality fall apart quickly which Cullerton seems to realize but even his bill is suspect because it is coercive. The unions don’t speak legally for annuitants or non union employees.

Comment by Liberty_First Tuesday, Jan 8, 13 @ 10:40 am
A11 flew through Rules Committee

Comment by RNUG Tuesday, Jan 8, 13 @ 10:44 am
=It seems to me that Nekritz really believes that the Supremes could be persuaded to allow changes in the pension benefits because of the state’s current financial problems.=

It’s a long shot, but not impossible. In ‘98 the Supremes might have forced the state to pay something like actuarially required contributions (constitutionally, the state has to pay pensions, but not fund them above crisis levels), but they said the state didn’t make its case that the pension funds were hosed. That’s easier now.

Basically if the state can make the case that the changes are necessary to protect the stability of the funds–and thus pay out future pensions–they might have a shot. Or that the state can use its police powers (police as in polity, not as in cops) to reduce pensions in order to preserve state functions.

Also: the law is *so* strict that any changes they haven’t already made are arguably unconstitutional. I.e. anything that’s not new revenues is gonna get challenged, unless they can get pensioners to actively agree to reductions (Providence’s mayor did this, but it’s harder at the state level).

Rhode Island is a good place to follow–they’re a few months ahead of us in this process.

Comment by whetstone Tuesday, Jan 8, 13 @ 10:46 am
Bonds ahead of pension payments means little. They can do that now. The Illinois Supreme Court says the legislature has the power to manage the budget any way they want and fund pensions any way they want. People need to read the ILL Sup. Ct. rulings on these issues. The constitution and court rulings say pensioners are entitled to their pensions but only the legislature can decide how to fund them.

Comment by Liberty_First Tuesday, Jan 8, 13 @ 10:47 am
whetstone - In 98 the court ruling included the statement that the plaintiffs didn’t show the pensions were in danger of not being paid.

Comment by Liberty_First Tuesday, Jan 8, 13 @ 10:50 am
“Leader Cross and I talked about this (need for pension reform) this morning and we both acknowledged that we will be required to do more.”

-Speaker Madigan
First Legislative Day, January 12, 2011

Comment by Not It Tuesday, Jan 8, 13 @ 10:53 am
RNUG

Re Ammendment 11………

This is a big deal. It’s a sop to the bond ratings clique and I think really reveals what is in play here. However, this also has constitutional implications and would be a very hard sell to the ISC in my experience.

Tha games continue! Can someone please explain what Governor Dufus was doing this AM? Every time he opens his mouth he seems to say less and less. He needs to start working night and day to get a clue or get out of the way. I think he is done after this term if this continues.

Comment by Old and In the Way Tuesday, Jan 8, 13 @ 11:00 am
There are so many constitutional ways of dealing with this, it really gets frustrating seeing the non-starters being prosposed.

Technically speaking, retiree health insurance subsidies aren’t “pensions” Some of the pension programs require some contributions from retirees, some don’t. We should reduce subsidies based on how many and how much pension a retired employee is receiving.We shouldn’t be sudsidizing early retiree health insurance for someone getting six figure pensions at age 55.

We should move to end the “end of career spiking” subsidy from the state, and make pension amounts proportional to lifetime contributions similarly to SSC. Of course this will be challenged in court, but perhaps a case could be made that this does not diminish nor impair pensions IN THE AGGREGATE rather than individually. I’m not sure how the court would interpret this definition in the consitution, but it certainly would be fairer to those who earned the pensions over time, rather than some union boss who paid in practically nothing and then unfairly sucked pensions out of the funds.

We should shift risk, and opportunity, for investing funds from the corrupt state investment management cabal to individual pensioners. It is possible for them to get better than the 8.5% modelled into pension finance, so a case could be made that this does not diminish nor impair pensions.

Finally, we need to address one of the real culprits in skyrocketing pension costs; teacher salaries increasing at about double the rate of inflation over the last 10 years. The state should cap ITS contributions to no more than $80K of salary nor increases greater than the rate of inflation, and shift the costs, over time, for local districts to pick up the costs for salaries and raises exceeding that amount through negotiation with their unions. Of course, protection of school districts and municipalities from strikes is essential to this sort of approach.

I think this is far better than the likely unconstitutional, unfair and temporary “fix” Nekritz is planning. It can give reduced liabilities without directly diminishing nor impairing “pensions”.

Whaddaya think?

Comment by Palos Park Bob Tuesday, Jan 8, 13 @ 11:09 am
- Old and In the Way - Tuesday, Jan 8, 13 @ 11:00 am:

=”Governor Dufus”= - Perfect!

=”I think he is done after this term if this continues.”=
But he has the Dupage County Republican machine, the State Chamber, the Civic Federation, and the Tribbies in his corner now.(?)

Comment by Crime Fighter Tuesday, Jan 8, 13 @ 11:15 am
@RNUG

If you read the referenced letter to the end, the next to last paragraph on page 3 is VERY enlightening as to the thinking about the health insurance.

I can’t get to the letter to read it, can you post the section you are talking about or a different link? Thanks!

Comment by Huggybunny Tuesday, Jan 8, 13 @ 11:19 am
We really screwed things up, and are against the wall, so retirees and employees have to take it in the shorts, or the whole thing will collapse, so we have to skip over that pesky constitution? Is that nekritz’ rationale that she is betting the supremes will go along with? Bettin on em don’t make em win. The GA has lots of options, but not the guts to pass any of them. Expand sales taxes to services. Tax retirement income.

Comment by Langhorne Tuesday, Jan 8, 13 @ 11:31 am
Agree 100% that nothing gets done without a push from the Speaker, and he clearly isn’t pushing on this. Any guesses why he isn’t?

1) Basic theory - Mike Madigan is cautious by nature and just doesn’t want to stick his neck out on this.

2) Conspiracy theory - He is beholden to union dollars and has assured union leaders confidentially for the past year that nothing will get done, and he knows that his silence is good enough to ensure nothing will get done.

3) Machiavellian theory - He figures Gov. Quinn will get the blame if nothing gets done, helping to pave the way for AG Lisa Madigan to beat Quinn in a primary.

I’m likely missing the right theory as to why Madigan hasn’t pushed on pension reform. Curious what others think?

Comment by Robert the Bruce Tuesday, Jan 8, 13 @ 11:36 am
===He figures Gov. Quinn will get the blame if nothing gets done, helping to pave the way for AG Lisa Madigan to beat Quinn in a primary.===

C’mon. Lisa could crush PQ in a primary if Quinn solved all the state’s problems and unemployment dropped to 0 percent.

Besides, why not fix the problem now so Lisa doesn’t have to?

Comment by Rich Miller Tuesday, Jan 8, 13 @ 11:38 am
HuggyBunny - Here it is: “Finally, the retiree healthcare access offered as consideration in HB 1447 and SB 1673 will not, as you contend, “lock-in” “billions of dollars of unfunded retiree health care obligations.” As you know and we discussed, the legislation offers access to a program of healthcare benefits that can be changed by the Department of Central Management Services annually to conform to state budgetary constraints. As a result, there is simply no merit to your claim.”

Comment by Norseman Tuesday, Jan 8, 13 @ 11:39 am
Huggybunny 11:19 am:

Couldn’t cut and paste because it is apparently a graphics scan. I had to retype it and double-checked it, so I believe this to be an accurate copy. Remember, this is only one paragraph of a 3 page letter giving opinions on various “pension” topics. I think the next to last sentence is key to the thinking …

/start

Finally, the retiree healthcare access offered as consideration in HB 1447 and SB 1673 will not, as you contend, “lock-in” “billions of dollars of unfunded retiree health care obligations.” As you know and we discussed, the legislation offers access to a program of healthcare benefits that can be changed by the Department of Central Management Services annually to conform to state budgetary constraints. As a result, there is simply no merit to your claim.

/end

Anyway, I’ve seen today’s surprise (A11); the “fix” is in. I’m tired of watching this train wreck in slow motion. Not even going to watch the House live feed. The weather’s halfway nice out, so I’m going to take down Christmas decorations and do other outside maintenance. The rest of you have fun …

Comment by RNUG Tuesday, Jan 8, 13 @ 11:40 am
Robert, I’d put my money on the fact that the shift is out. He may have agreed not to stop a bill without the shift, but did he say he would aggressively push that bill.

Comment by Norseman Tuesday, Jan 8, 13 @ 11:41 am
If they “fix” the problem now Rich, wouldn’t Lisa be in the thick of it having to vigorously defend this joke in court?

Comment by PublicServant Tuesday, Jan 8, 13 @ 11:45 am
==Besides, why not fix the problem now so Lisa doesn’t have to?==
I hear you. And if pension reform did pass, Quinn would likely get the blame for some of the tough parts of the reform measure, helping to mobilize a lot of primary support for Lisa (not that she needs it, as you point out). So theory #3 is out.

Comment by Robert the Bruce Tuesday, Jan 8, 13 @ 11:48 am
Not sure how Madiar can claim with a stragiht face that giving up a constitutionally protected pension right for “healthcare benefits that can be changed by the Department of Central Management Services annually to conform to state budgetary constraints” can amount to consideration. Bait and switch.

Comment by qaz Tuesday, Jan 8, 13 @ 12:08 pm
Crime Fighter

“But he has the Dupage County Republican machine, the State Chamber, the Civic Federation, and the Tribbies in his corner now.(?)”

And they have been so successful in their support for all those statewide Republican office holders!

Comment by Old and In the Way Tuesday, Jan 8, 13 @ 12:12 pm
The real best chance to deal with gov pensions was 2008 when the state constitution required the once evey 20 year vote on a constitutional convention. The pensions were in bad shape then and everyone knew it. They also knew that the constitution’s pension anti-impairment clause would block meaningful changes. The unions mobilized their members and friendly legislators. And no convention. The pensions are deteriorating as expected with no solution in site. And the powers which prevented change in 2008 are still at the helm.

Comment by Cook County Commoner Tuesday, Jan 8, 13 @ 12:12 pm
==Technically speaking, retiree health insurance subsidies aren’t “pensions”==

And, technically speaking, the constitution protects the “benefits” of anyone participating in a pension system, not just the pensions, so this is a questionable argument.

Comment by Anon. Tuesday, Jan 8, 13 @ 12:32 pm
Langhorne @ 11:31 said:
=”The GA has lots of options, but not the guts to pass any of them. Expand sales taxes to services. Tax retirement income.”=
Thank you. This would be a legal moral and simple way to address the root cause of the this problem.
In management of the affairs of Illinois state government the first instinct is to avoid doing what you are supposed to. Unfortunately, Illinois is notorious for going to great trouble and expense to avoid the right thing.
Now there are three of us in the state in support of a simple, viable, and legal solution: You, me, and Ralph Martire.

Comment by Crime Fighter Tuesday, Jan 8, 13 @ 12:33 pm
The pensions are deteriorating as expected with no solution in site.

There are solutions out there, some unconstitutional, some constitutional but unpalatable. If the state had a fire sale, it could probably raise half of the unfunded liability in a years’ time. The tollway system alone is probably worth $15 billion to a private investor.

Comment by Six Degrees of Separation Tuesday, Jan 8, 13 @ 12:47 pm
The clock is ticking: There’s a few more hours left with a lame-duck legislature in what is likely the last, best chance to solve the pension deficit problem.

And I think most will place full blame on the GA and the Governor. Quinn clearly put solving this issue ahead of getting reelected, while the GA clearly has not. Quite frankly, with the number of lame-duckers now available to vote without facing any consequences at the voting booth, my guess is that both party’s leadership in the GA will be held more responsible for this failure than the Governor.

Comment by Soxfan Tuesday, Jan 8, 13 @ 12:48 pm
=Now there are three of us in the state in support of a simple, viable, and legal solution: You, me, and Ralph Martire=

You fogot to mention that when Martire’s lips move the words are coming out of the employee unions mouths.

You’re right about his “simple’ solutions, though. Take as much as you can from non-public union employees and give it to public union employees, drive as much non-political business out of Illinois and overburden those remaining, and get to 60% of the state’s voters paying no taxes so that they’ll vote for Dem hacks who’ll stick the bill for the otehr 40%.

Where were the three of you when Blago was gving away unaffordable early retirement packages, end of career “spiking” that help push the pension funds off the cliff, and teacher salaries were increasing an unsustainable double the rate of inflation?

That was the REAL root cause of the problem, in addition to the Dems and their penion funding policy of “Giveaway now-PAY NEVER!”

BTW, Martire wants to ammend the constitution to create a grduated income tax to hurt the overburdened “40%” who pay the bills in this state. Gee, if he’s ammending the constitution anyway, I wonder why he doesn’t support “diminishing and impairing” unfair and unsustainable pensions?LOL

Comment by Palos Park Bob Tuesday, Jan 8, 13 @ 12:52 pm
Anon 12:32 is right on- the term “benefits” is used, not annuity.

Comment by DuPage Dave Tuesday, Jan 8, 13 @ 1:19 pm
OK, I’m addicted.

They are apparently still working on SB1673 passage … amendments coming fast and furious.

A12 - shortens pension holiday to 3 yrs but retains age 67 requirement

A13 - totally new language - creating a commission to submit changes to personnel and pensions, have to report by April 30, 2013, and the commissions changes becoem law unless the GA votes AGAINST it. Specifically orders the commission to look at whole list (think 11 items), including COLA, Final Average Compensation, other states, employee contributions, public welfare and financial ability of the State.

A14 - replacement of A13, partially cleaning it up, If propsed bill not rejected by both the House and Senate, requires the House Speaker and Senate President to certify it and send to Gov.

A15 - replacement of A14, ditto

First sent to Rules, referred to Personnel and Pensions

Comment by RNUG Tuesday, Jan 8, 13 @ 1:49 pm
Boing, bling, blong! The can is getting kicked down the road? House at ease for Personnel and Pensions Committee meeting.

Comment by Nearly Normal Tuesday, Jan 8, 13 @ 1:59 pm
Only for 90 days … and you can almost bet both houes won’t reject the recommendations made by the commission

Comment by RNUG Tuesday, Jan 8, 13 @ 2:02 pm
A13, A14 and A15 — OK, I can understand that someone who is desperate enough might argue that the pension clause doesn’t prohibit all the other proposals, but whoever proposed these didn’t even pass 8th grade civics.

Comment by Anon. Tuesday, Jan 8, 13 @ 2:17 pm
There are so many issues that cried out to be addressed over the past two years and could have been resolved in the Veto Session with so many retiring legislators –

I have to echo those who have labeled the past two years of Congress “worst Congress ever” with an Illinois adaptation: “worst General Assembly session ever.”

Illinois Republicans want to back off of any unpopular votes, blaming the state’s many fiascos on the Democrats. And the Democrats (or Democrat) seek to retain political power rather than govern.

Sad, sad, sad. Pensions, debt, delayed payments to fools still contracting with state government,need to modernize revenue systems, begin implementing Obamacare by restructuring Medicaid, prisons understaffed and ready to explode, mentally ill walking the streets even though repeated gun violence by mentally ill persons is rampant across the country with episodes in Illinois — all still just waiting for leadership in governance.

Comment by Capitol View Wednesday, Jan 9, 13 @ 12:31 am