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Leaders make pension “progress,” but no vote yet

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Illinois

* I told subscribers about this last week, on Friday and filled them in on some details today. Gatehouse had a story up today which was essentially the same stuff I told subscribers last week. The four legislative leaders have been meeting to discuss pension reform and are making progress. But that doesn’t mean a vote will happen this week…

“I’ve been directed to say there is good progress,” Steve Brown, spokesman for House Speaker Michael Madigan, D-Chicago, said afterward. “There are some different elements of a reform bill that the leaders agreed to send off to the pension systems to score.”

Brown would not elaborate. […]

“He has been engaged in constructive conversations with all legislative leaders over the last week,” said Cullerton spokeswoman Rikeesha Phelon. “It’s clear that the other leaders consider $138 billion to be the baseline for saving. With that in mind, Cullerton is working with the leaders to identify a fair way to increase those savings. The progress is good, but new ideas are still being considered and scored.”

In the past, it has taken more than a week for actuaries to review, or “score,” pension reform proposals and verify the savings that can be expected. Asked if that would preclude a vote on pension reform next week, Phelon said, “I think that’s a safe assumption. The numbers need to work.” […]

“Discussions have been good, and progress is being made,” [Vicki Crawford, spokeswoman for House Republican Leader Jim Durkin] said. “We need to wait for scoring to come back from the systems, so it is highly unlikely there will be a vote next week. […]

“Leader Radogno believes good progress is being made. As they continue to talk, they will look at the numbers and make sure it all works,” said spokeswoman Patty Schuh. “The numbers have to work. To go without numbers is not a very credible position for the state of Illinois.”

Discuss.

posted by Rich Miller
Monday, Nov 4, 13 @ 10:45 am

Comments

What is so magical about 150 billion? They just have to get another $12 billion out of Grandmas check? It is ridiculous.

Comment by Obamas Puppy Monday, Nov 4, 13 @ 10:47 am
“Progress,” even without a vote, probably gives Quinn a face-saving way to get out of the corner he put himself in on an ADM bill.

Comment by wordslinger Monday, Nov 4, 13 @ 10:49 am
“Saving” translates into reduction of pension benefits. I’m not sure how anyone on the pension committee think this will pass the constitution muster. It will be a waste of time and money. I know union reps and retirees who are already lined up to file a lawsuit.

Comment by Rusty618 Monday, Nov 4, 13 @ 10:56 am
What’s magical about the numbers they are trying to hit is. at that level, they will be able to claim with a somewhat straight face they will achieve a balanced budget and they can get through the election without proposing a tax increase.

Of course the whole thing will come apart after the election when the budget falls apart and when the ISC rules the dinimishment is unconstitutional.

Comment by RNUG Monday, Nov 4, 13 @ 10:56 am
RNUG, I think that pretty much explains the political motivation for the current pension “progress”.

Comment by PublicServant Monday, Nov 4, 13 @ 11:01 am
==“Saving” translates into reduction of pension benefits==

Nobody will know what does or doesn’t pass “muster” until they pass a bill and it goes to the Supreme Court. I think they pass something they believe is the least offensive to the Constitutional language and then wait for the Court to tell them whether they managed to thread the needle or not.

Comment by Demoralized Monday, Nov 4, 13 @ 11:11 am
Enough with the “savings”. There will be absolutely no savings. The intent is to take money that is legally obligated to pay pension benefits and spend it on other more politically beneficial programs.

Comment by Spidad60 Monday, Nov 4, 13 @ 11:28 am
What I can’t figure out, is why include a reduction in contributions for existing employees? If that is supposed to be “consideration”, then doesn’t it just ask the Court to rule against reducing the benefits of those already retired or soon to be retired?

Comment by kimocat Monday, Nov 4, 13 @ 11:37 am
kimocat @ 11:37 am:

If they have any hope of getting it through, they have to pretend to be following some contract law principals …

Comment by RNUG Monday, Nov 4, 13 @ 11:49 am
Spidad60, =There will absolutely no savings= You got that right! Most retirees spend all of their pension money in Illinois, any “savings” end up as an equal reduction in Illinois consumer spending.

Comment by DuPage Monday, Nov 4, 13 @ 11:49 am
Yes Demoralized. As you say, nobody will know, but people can read. The current compromise revolves around reducing the COLA to 1/2 the CPI from it’s current flat 3% rate. Actuarial estimates indicate a diminishment (err sorry, I mean a savings) of 136 billion over 30 years. We have a constitution that says the benefits of the pension shall not be diminished. If the argument is that the COLA is not a benefit of the pension, I have no idea what it otherwise could be considered a benefit of.

I guess you never know what is a waste of time until the time is actually wasted, but stating that nobody knows what will pass muster is hardly a reason for passing into law a bill that most reasonable people think is unconstitutional on its face, when that will do nothing except make the situation worse in the long run.

Comment by PublicServant Monday, Nov 4, 13 @ 11:52 am
The Illinois Constitution describes public pensions as a contractual relationship. Under contract law if one party wants to change the terms of a contract they have to negotiate those changes with the other party. So far, the latest efforts of the pension committee and the General Assembly leaders seem to be GA members negotiating among themselves.

The sooner the GA starts treating public pensions like the contractual relationship it is - and starts negotiating with retirees and current state employees, teachers, and state university employees, the sooner the issue will get solved. But that may not happen until the courts have negated what GA members have negotiated among themselves.

Comment by Joe M Monday, Nov 4, 13 @ 11:57 am
This is nothing more then a politcal process that is fumbling around trying to solve a legal and moral issue. The politics of this is that the GA may need to pass something and then when the SC overturnes they have political cover to make all of the legal changes that have been proposed. The GA can blame the SC and those greedy state retirees and workers for this.

Comment by facts are stubborn things Monday, Nov 4, 13 @ 12:00 pm
Hey Rich –

Fix your clock.

Comment by Wallinger Dickus Monday, Nov 4, 13 @ 12:03 pm
The republican propsals for further pension reform would push the savings (reductions) up to 160 B. I thought the pension committe was suppose to come up with a compromise between the house bill and the senate bill. Seems like that would likey be a number about 1/2 way between SB 1 and SB 2404. By my math this 160 B number puts it about 90% or so of what SB 1 had….not much of a compromise. I beleive this whole thing will not pass if they push the savings much above 138 B. The senate is pretty ticked off about this and that SB 2404 never even got a vote in the house. Why go more then 1/2 way between a bill (SB2404) that passed the senate and was not called in the house and (SB 1) that was passed in the house and defeated in the senate.

Comment by facts are stubborn things Monday, Nov 4, 13 @ 12:07 pm
==but stating that nobody knows what will pass muster is hardly a reason for passing into law a bill that most reasonable people think is unconstitutional on its face==

I understand your opinion on the subject very clearly. And I mostly agree with it. But to think that everybody is just going to throw their hands in the air and say, “Hey, sorry we aren’t going to pass anything because it might be unconstitutional” is just silly. Something is going to probably pass. That’s just a fact of life. I don’t know why, if people believe that anything is unconstitutional, there is such a fear about a bill being passed. Let the court rule.

Comment by Demoralized Monday, Nov 4, 13 @ 12:07 pm
-facts- @ 12:00

That is one of my theories also. To flush it out a bit, I believe that Madigan feels the ISC got the State into this mess with it’s IFT ruling giving the GA permission to short or skip funding … and now he’s looking for the ISC to give the GA an order to raise taxes or require full funding every year.

Comment by RNUG Monday, Nov 4, 13 @ 12:10 pm
It is interesting (sickening really) how the “savings” is really having retirees paying back what was stolen from them and given to others. Along the way I’ve read about retirees leaving the state and others chastising them because they’d have to pay income tax on their pensions in other states. What some don’t realize is that slashing pensions will circulate less money spent by pensioners in this state……..and some of those pensioners would rather pay income tax in another state than spend a penny of it here.

Comment by Anonymous Monday, Nov 4, 13 @ 12:15 pm
There is no vote on pensions yet, and there will be no vote until January 2015. We are in full election year mode now.

Comment by Ruby Monday, Nov 4, 13 @ 12:19 pm
Just wondering since this involves a contract and contract law after the highly politicized Illinois Supreme Court does what Madigan and Burke (kingmakers) tell them will this be kicked to federal court to be overturned and ruled unconstitutional

Comment by Fed up Monday, Nov 4, 13 @ 12:25 pm
Someone mentioned a while back that back in the early 80s,the employee contribution was increased from 3 to 4% to cover the cost of the 3% COLA. I seem to remember that happening, but not the details. That is why I believe the reduction in the employee contribution is being “offered” as consideration. I for one am willing to increase my contribution to keep what I have earned, and paid for. Why is that not being proposed?

Comment by Spidad60 Monday, Nov 4, 13 @ 12:26 pm
Demoralized, I’m not stopping the court from ruling if something is passed, nor do I necessarily fear it going before the court, although I’d certainly prefer nothing did. Having said that, I and others that will be directly affected by any onerous bill, I think should, and I know I will continue to comment on the aspects that I disagree with, and explain why I disagree. In doing so, I had initially hoped to attempt to sway legislative opinions. That hasn’t apparently occurred to the extent that I had hoped an appeal to reason would do. I’ve come to realize that the political process the way it’s practiced by the self-interested hacks who comprise a large percentage of the Illinois House and Senate couldn’t care a lick about morality or reason. They only care about being re-elected, and being responsive to the money that facilitates that re-election. So I’m settling for continuing to comment in rebuttal to the many commenters who support that type of immoral and unreasonable behavior…whether it’s my turn in the barrel, or not.

Comment by PublicServant Monday, Nov 4, 13 @ 12:27 pm
It will be interesting to see what happens in Rhode Island, where they passed drastic pension changes a couple of years ago. The public employee unions sued.

Last winter, Rhode Island Superior Court Judge Sarah Taft-Carter, after denying the state’s motion to dismiss the cases, ordered the two sides to federal mediation in an effort to avoid a potentially long, messy and costly trial.

The Governor and Treasurer on one side - and the public employee unions on the other, have been meeting with the mediators and giving reports back to the judge on their progress. Another report is due today. The Governor has said the two sides are very close to a deal. The Unions have formed committees to disseminate the terms of an agreement to its members. However, any agreement may have to be approved by the General Assembly, and they are miffed that they have been left out of the mediation process, and many of them stand by the diminishments they previously passed.

Comment by Joe M Monday, Nov 4, 13 @ 12:57 pm
Does Rhode Island have the same Constitutional provision as Illinois?

Comment by Anonymous Monday, Nov 4, 13 @ 12:59 pm
Well said Public Servant.

Comment by Norseman Monday, Nov 4, 13 @ 1:07 pm
And now Chicago wants a pension holiday!! They are in worse shape the the state. The General Assembly better not give them one!! Haven’t they learned anything!!

Comment by Union Man Monday, Nov 4, 13 @ 1:20 pm
Rhode Island does not have the same constitutional protection as Illinois.

However, past court rulings have said the pensions are contracts.

Rhode Island has the same contract clause as Illinois in its constitution-the State shall not pass any ex post facto laws or laws impairing contracts (Illinois Consitution Section 1).

Comment by archimedes Monday, Nov 4, 13 @ 1:28 pm
Demoralized

Legislators swear to uphold the state constitution. Can the majority in good conscience claim it’s perfectly constitutional to diminish pension benefits? I don’t see how they can, unless their fingers are crossed. Saying it’s up to the courts is to abandon their own responsibility to uphold the constitution.

Suppose the issue under debate was, say, banning all guns. Voting for it and saying it’s up to the courts to decide would not be an adequate defense of voting to violate the state and federal constitutions.

Comment by Anonymous Monday, Nov 4, 13 @ 1:53 pm
Anonymous @ 1:53 pm:

Speaking of ignoring their oath, the only ones that can censure congresscritters are those same congresscritters. That was a major oversight of the 1970 Con-Con … guess they thought the voters would be smart enough to throw the bums out.

Maybe at the next opportunity this State’s voters will include a citizen’s course of action against elected officials. I’d be willing to bet there are enough ticked off state retirees to push that issue when/if Illinois ever holds another con-con.

Comment by RNUG Monday, Nov 4, 13 @ 2:22 pm
“Pension reform” is a euphemism for clawing back benefits that have already been earned. Put another way, it translates into a government taking of property without just compensation and in violation of contract.

Comment by reformer Monday, Nov 4, 13 @ 2:44 pm
RNUG

I doubt any of us will be around when there’s another Con-Con. It appears on the ballot every 20 years, but almost all powerful interest groups have calculated that they have something to lose so they unite against it. Consequently, I doubt we’ll ever see one in our lifetime.

Comment by reformer Monday, Nov 4, 13 @ 2:47 pm
Too wordy, reformer. I like the word “theft”. Simple and accurate.

Comment by PublicServant Monday, Nov 4, 13 @ 2:49 pm
==Saying it’s up to the courts is to abandon their own responsibility to uphold the constitution.==

Anything a legislature passes is assumed to be Constitutional until a court says that it isn’t. And I disagree with the premise that you can simply tell the General Assembly that your opinion (that’s “your” generically, not you specifically) is that anything is unconstitutional therefore they cannot pass anything. Further, I don’t think they are violating their Constitutional oaths by passing something.

@PublicServant:

I don’t disagree with your sentiment and I am affected by anything that happens so don’t misunderstand my thoughts as being happy about any of this. I’ve just chosen to focus on the inevitable court fight.

Comment by Demoralized Monday, Nov 4, 13 @ 2:58 pm
==will include a citizen’s course of action against elected officials. ==

That’s a monumentally bad idea. I’m not in favor of recall provisions. We have elections. I don’t believe in a “do over” because we don’t like a decision somebody has made.

Comment by Demoralized Monday, Nov 4, 13 @ 3:00 pm
reformer @ 2:47 pm:

I’m young enough I should see it …

Comment by RNUG Monday, Nov 4, 13 @ 3:15 pm
RNUG - Monday, Nov 4, 13 @ 12:10 pm:

-facts- @ 12:00

= To flush it out he’s looking for the ISC to give the GA an order to raise taxes or require full funding every year. =

Appreciate you drilling down a little more on this agreed concept of ours — suspect you are correct.

Comment by facts are stubborn things Monday, Nov 4, 13 @ 3:51 pm
=== Anything a legislature passes is assumed to be Constitutional until a court says that it isn’t. ===

I can’t argue with the fact that this is a STANDARD ADOPTED BY THE JUDICIARY in deference to the legislative branch of government. The courts feel that they must have a high standard to overturn the actions of the legislature. However, it is ridiculous not to expect the members of the General Assembly to take the constitution into consideration in passing legislation.

The constitution sets forth the structure, rights, responsibilities and duties of government and the rights and obligations of the citizens of the state. It is not intended to be a document to be ignored until someone files a lawsuit. The issue of unconstitutionality of legislative proposals should be and has been raised by legislators. Sometimes political considerations result in the majority of the legislators choosing to approve questionable legislation. Malpractice reform comes readily to mind, although the constitutionality issues were not as clear cut (plain language) as they are in this pension debate.

Another example of political consideration by the legislature overriding their adherence to the clear language of the constitution was uncovered in legal briefs filed relating to the Quinn legislator salary Item Veto. The brief from Madigan and Cullerton admitted that the legislative furloughs passed for the last several years were unconstitutional. This is not a sudden epiphany by these leaders, they knew it at the time. They determined that fears of reelection problems would prevent aggrieved members from suing.

Why do we not see a bigger push for a graduated income tax by liberal members? Why is there no argument that a graduated income tax is okay until the courts review it? Because it is clear that the constitution PROHIBITS IT and the intense political ramifications would result in immediate action to overturn such a law.

I’m not a member of the judiciary so I do not accept the idea that anything done by the General Assembly is constitutional. Nor am I going to abdicate my right to challenge measures that I can see by the plain language of the constitution are not lawful. While my exercise of that right is politically insignificant. Joining with other like-minded individuals may enable us to reach enough principled members to stop a travesty like what is occurring regarding pension reduction proposals.

Comment by Norseman Monday, Nov 4, 13 @ 4:35 pm
One more question. The unfunded liability is around 100 billion dollars, or so I read. Tell me why they are aiming to reduce benefits by $138 billion or more?

Comment by Bobbysox Monday, Nov 4, 13 @ 5:40 pm
==However, it is ridiculous not to expect the members of the General Assembly to take the constitution into consideration in passing legislation.==

I believe that the GA is trying to do that with this pension legislation. Whether I agree with their interpretations is another matter.

Comment by Demoralized Monday, Nov 4, 13 @ 5:46 pm
Madigan has been the one leader pushing for more savings. Yet the civic committee, Tribune, reformers and the rest will give him no credit if a bill passes with more savings.

Comment by low level Monday, Nov 4, 13 @ 5:50 pm
==Why is there no argument that a graduated income tax is okay until the courts review it?==

I’m not sure that’s a good analogy because the constitution specifically says the tax shall be non-graduated. Now, you or I might read the pension clause “shall not be diminished or impaired” in a similar unambiguous way, but there are legal minds out there who have a different definition or interpretation of what “diminish” or “impair” means.

Comment by Demoralized Monday, Nov 4, 13 @ 5:54 pm
They gave to hit that number or more on pensions, and keep the tax increase, and take more spending from the budget, and have a mechanism to hold spending increases in check, — in order to have a shot at a “balanced” fiscal situation in the medium term. To think this progress, if it occurs on the pensions, takes pressure off the other tough choices, is mistaken.

Comment by walkinfool Monday, Nov 4, 13 @ 6:02 pm
=== but there are legal minds out there who have a different definition or interpretation of what “diminish” or “impair” means. ===

You pay a lawyer enough, they’ll say “up” is “down.” That doesn’t make it so.

=== I’m not sure that’s a good analogy because the constitution specifically says the tax shall be non-graduated. ===

Didn’t you say the courts can only say if a proposal is unconstitutional? Congratulations, you have just made an insightful interpretation of the constitution and the courts haven’t even ruled on it. The analogy served its purpose.

Comment by Norseman Monday, Nov 4, 13 @ 6:23 pm
Bobbysox @ 5:40 pm:

Simple answer skipping over some of the nuances … the $100B is what is owed if you paid it all back TODAY. When you pay it back over time you have to make up the lost investment earnings; the estimated total is somewhere between about $180B and $270B depending on the assumptions (time, earnings rate) chosen.

Comment by RNUG Monday, Nov 4, 13 @ 6:53 pm
=== but there are legal minds out there who have a different definition or interpretation of what “diminish” or “impair” means. ===

Actually, there shouldn’t be very much wiggle room on “diminish”. Various IL courts have pretty much already spelled that out with some of the pension cases since 1970. It was addressed several times, usually in combination with a change in terms of the service time calculation. One case really stood out to me; a reduction of about $35 a month was consider to be diminishment.

For a basis of comparison, its claimed the average state retiree pension is $28,800 annually. At a 3% AAI (COLA), the next increase would be $864 annually / $72 monthly. At a 1% AAI, the numbers would be $288 annually / $24 monthly. That would be a diminishment of $48/month.

If the ISC stays consistent with previous rulings, I just don’t see such a change passing constitutional muster.

Comment by RNUG Monday, Nov 4, 13 @ 7:07 pm
Union Man - Monday, Nov 4, 13 @ 1:20 pm:

And now Chicago wants a pension holiday!! They are in worse shape the the state. The General Assembly better not give them one!! Haven’t they learned anything!!

+++++++++++++++++++++++++++

Rahm and the CTU both agreed to a pension holiday in the spring but the General Assembly voted it down in late May. What the CTU was thinking I do not know.

The retiree association’s from TRS will be in court within minutes of any thing passed. I’m guessing at 18 months of court battles to start with.

Radogno was on WBBM’s At Issue program yesterday. She said the Dems are seriously looking at a graduated State Income tax to fund pensions.

Comment by Rollo Tomasi Monday, Nov 4, 13 @ 8:13 pm
Illinois Democrats should be seriously looking at a graduated state income tax and an income tax on retirement income to fund state government programs and pay back the money they borrowed when they took pension holidays. But it won’t happen until after the election.

Comment by Ruby Monday, Nov 4, 13 @ 10:29 pm
=== but there are legal minds out there who have a different definition or interpretation of what “diminish” or “impair” means. ===

There was an expression used in the former Soviet Union regarding their government. It translates to…”try to prove you’re not a camel.”

Comment by angelo mysterioso Tuesday, Nov 5, 13 @ 8:09 am