Latest Post | Last 10 Posts | Archives
Previous Post: GOP’s state remap case imploding
Next Post: *** UPDATED x1 *** Quinn claims Ohio offering Sears $400 million to move
Posted in:
* Doug Finke rightly points out some stark legislative hypocrisy regarding the negotiated unemployment insurance proposal…
The deal, struck after months of negotiations, calls for the Illinois Department of Employment Security to float bonds. The proceeds will be used to pay off the debt to the feds. It’s supposed to be a good deal because the state thinks it can get a much lower interest rate from a lender than from Washington. It’s expected to save businesses $405 million and the state $240 million.
If the concept of floating bonds to pay off a debt sounds familiar, it should. Gov. Pat Quinn has tried for months to convince lawmakers to float bonds to pay off the state’s backlog of bills. Billions are owed to state vendors, medical providers, social service agencies, you name it. When those bills are paid late, the state pays interest.
Quinn calls it a debt restructuring since the state owes the money anyway and now is shifting the burden of those nonpayments to people and organizations that are not in a good position to absorb that burden. The administration believes it can borrow money cheaply and get the state current on its bills.
So far, though, lawmakers have shown no inclination to go along. Many argue the Quinn plan will increase the state’s debt and not force spending cuts, so it is bad. It also doesn’t help that it’s Quinn’s idea, which automatically makes it suspect to many lawmakers.
Still, the idea of borrowing to pay off a debt isn’t anathema to every lawmaker in every case. Only one person - Sen. Chris Lauzen, R-Aurora - voted against the unemployment deal.
Borrowing is only bad when partisan politics makes it so. It’s like taxation. Raising taxes to fund the capital bill received broad bipartisan support. Raising taxes to fund operations received no bipartisan support. One set of taxes was good and one wasn’t.
As for this UI bill, the Chicago Tribune has repeatedly editorialized against any more borrowing, but uttered not one peep before, during or after the overwhelming bipartisan roll calls in favor of the legislation. Imagine that.
* But the DeKalb Daily Chronicle far too easily breezes past serious constitutional questions regarding the pension fund problems, although it’s right that a solution is still nowhere in sight…
Opponents to SB 512 say the bill is unconstitutional. The Illinois Constitution says pension benefits “shall not be diminished.”
So we sit and wait and wonder.
We wait for lawmakers to have the courage to tackle the pension problem and make an unpopular decision. We do so wondering if it will even be considered in 2012 because it is an election year for all seats in the Legislature.
Will lawmakers have the political will to demand sacrifice in the public sector?
Lawmakers are quick to point out the pension problem. They’re fast to say something needs to be done. But when it comes to fixing the problem, lawmakers have been dragging their feet, disagreeing with the only solution on the table without offering an alternative.
So we sit and wait and wonder.
When will lawmakers do their job?
All lawmakers solemnly swore an oath to defend the Constitution, so knowingly violating that oath would be a very serious breach of conduct. The oath is sacred and is not something to be cavalierly tossed aside, as the Chronicle and other publications, particularly the Tribune, are so wont to do. If a legislator has good reason to believe that a bill is unconstitutional, then that legislator absolutely must not vote for it. And there is ample reason to believe that the proposal in question is unconstitutional.
But I do agree that opponents ought to help find another solution to this pension mess, and quickly.
posted by Rich Miller
Monday, Nov 21, 11 @ 5:30 am
Sorry, comments are closed at this time.
Previous Post: GOP’s state remap case imploding
Next Post: *** UPDATED x1 *** Quinn claims Ohio offering Sears $400 million to move
WordPress Mobile Edition available at alexking.org.
powered by WordPress.
Lawmakers seem willing not only to ignore common sense by refusing to restructure the debt, an act which would save taxpayers money, and ignore the constitution by pressing for a clearly unconstitutional solution, but they continue to ignore the willingness(publicly stated) of the unions to sit down and work out a negotiated bill, just as was done with education reform and has been done on so many other major bills in the past.
There isn’t anyone on either side of the debate who denies there is a big pension problem. But the Civic Committee, whose members are accustomed to getting things their way, and some legislative leaders insist on forcing lawmakers to vote for an indefensible bill. It is they who are holding up a solution to this problem which won’t go away.
Comment by truthteller Monday, Nov 21, 11 @ 6:03 am
Is that the same sacred constitution that requires Illinois to have a balanced budget?
Comment by Confused Monday, Nov 21, 11 @ 7:41 am
I guess everyone knows that the feds won’t mess around when you owe them money, but vendors just have to take it.
Comment by wordslinger Monday, Nov 21, 11 @ 7:53 am
The violation of the constitution from 512 is pretty clear to me. But I also rnote that the bill retroactively stripping Preckwinle and Piccioli their access to the teacher pension system passed unanimously. But not one peep from legislators on the blatant constitutional violation on that one.
Don’t get me wrong - I don’t like what the two did, but there is no question that the bill taking their pensions away is unconstitutional.
Comment by Dave Monday, Nov 21, 11 @ 7:54 am
There’s a big difference in General Obligation Bonds and the Revenue Bonds that were used to resolve the UI debt. The Revenue Bonds are backed by employer unemployment insurance taxes and funded entirely by the business community. Benefits are set statutorily and the General Assembly can’t increase “spending”. Resolving the debt saves the state $240 million in interest payments from GRF.
On the flip side, state general revenue funds are used to pay of GO bonds. There hasn’t been much to show that the Assembly, after borrowing to pay off the credit card, would stop its spending patterns.
Comment by 1776 Monday, Nov 21, 11 @ 8:32 am
I am sure the legislature will eventually, true to form, pass a law it knows to be constitutionally invalid (e.g., video game ban). Why? To shift blame to the courts and say “see, we tried.” Then, we will be that much further in the hole with no fix in sight.
Comment by Bush Twins Monday, Nov 21, 11 @ 8:42 am
It would be ironic if Preckwinkle and Piccioli, when they sue and win, become the test case for everyone else’s pensions.
Comment by Bush Twins Monday, Nov 21, 11 @ 8:47 am
===when they sue and win===
I doubt it’ll ever come to that, for various reasons.
Comment by Rich Miller Monday, Nov 21, 11 @ 8:57 am
I can’t help but think “pension reform” is code for “pension reduction” every time I hear it, which we all know it is. Cut the retirement for lower and middle class workers while we pay tax money or give tax breaks to corporations to stay in Illinois. There’s OWS in a nutshell.
Comment by Flan Monday, Nov 21, 11 @ 9:22 am
1776 - the state tax increase factored in a bond borrowing to pay off the overdue bills. So, yes, there is revenue for such a borrowing.
Comment by King Louis XVI Monday, Nov 21, 11 @ 9:28 am
About that whole solemn oath to defend the state constitution… if lawmakers really took that seriously they might have paid some attention to that whole balanced budget clause and if they did, we wouldn’t have anywhere near the problems we have today.
Still problems, but the scale would be a good order of magnitude less.
Comment by John Bambenek Monday, Nov 21, 11 @ 9:41 am
The problem with issuing bonds to pay off old debts is akin to taking a consolidation loan to get rid of high interest debt, but continuing to spend beyond one’s means.
You save money on one hand, but continue to dig the hole you are in deeper. Its just another way to kick the can down the road.
Comment by Plutocrat03 Monday, Nov 21, 11 @ 9:49 am
what 1776 said.
Comment by dupage dan Monday, Nov 21, 11 @ 9:51 am
About that whole Balanced Budget clause that you right-wingers seem so intent to throw out there every time someone states that reducing pensions would violate the Illinois Constitution, are there any successful lawsuits that support your position that the state has violated that clause?
Comment by PublicServant Monday, Nov 21, 11 @ 9:51 am
I’ll see the budget balancing clause and raise the Preamble, which states:
“We,the People of the State of Illinois, in order to…eliminate poverty and inequality, assure legal, social and economic justice, provide opportunity for the fullest development of the individual…do ordain and establish this Constitution.”
Are Bambanek and company as insistent about upholding that part of our Constitution?
Comment by reformer Monday, Nov 21, 11 @ 10:15 am
Rich -
There is No Logic Failure here.
The only alternative to borrowing to pay off the uninsurance fund debt is to require all employers — including the public sector — to increase their unemployment insurance premiums.
A) This borrowing saves businesses $405M a year.
B) Businesses hire good lobbyists.
C) Businesses make campaign contributions.
D) Businesses are good at getting their message out.
E) Businesses play for keeps.
Based on the real merits — B-E — this move is perfectly logical.
Comment by Yellow Dog Democrat Monday, Nov 21, 11 @ 10:17 am
Illinois, under the government accounting standards followed by almost every state, has technically had a “balanced budget” every year for at least 30 years. Both Dem and GOP governors, both here and elsewhere, have taken advantage of those standards in ways that don’t meet a common-sense smell test, and wouldn’t fly in most corporations.
The solutions to both these problems, are not constitutional arguments, but agreed process and goal changes: like Kotowski’s new budget process, the new House-driven annual spending caps, and a negotiated agreement on pensions.
Comment by walkinfool Monday, Nov 21, 11 @ 10:51 am
PublicServant-
Just because a clause is unenforceable doesn’t mean it hasn’t been broken. I also wasn’t talking about pensions at that given instant. There are a variety of ways to balance a budget.
reformer-
Our state has a 10.1% unemployment rate, last I checked. We have a state government that essentially is destroying downstate. And we have businesses that won’t locate or grow in Illinois because of the state’s chronic financial problems (and the state payment cycle is probably the biggest one currently). So yeah, I’m intent on promoting policies that eliminate poverty and promote opportunities.
Comment by John Bambenek Monday, Nov 21, 11 @ 11:00 am
I have yet to see one good argument against borrowing to pay off the state’s back debt owed to providers. To me those that are against borrowing are essentially saying that they believe it is OK to continue to shaft the providers and force all borrowing costs on to them. It doesn’t matter what the goals of those that are against borrowing are, the effect is the same and it cannot be denied.
Comment by Demoralized Monday, Nov 21, 11 @ 11:07 am
Changing the pension system for current employees would make no difference in the fact that the state isn’t paying its share now. The state would still owe billions with no plan to pay it off. As a state employee for 22 years, I do think there need to be some changes made. Start with abolishing the rule of 85 and set a standard retirement age of 67 (I think all new hires are under this plan). Even if this is unconstitutional, if the union agrees and the GA wants to do it, change the constitution. It is also unreasonable to expect free health benefits in this day and age. However, asking for $700 per month premiums is also ridiculous.
But, none of these changes, nor the changes in SB512 will change the fact that the state still owes a huge debt to its retirement systems. Unless that is addressed at the same time as the proposed changes, this state employee says “leave my benefits alone”.
Comment by Anonymous Monday, Nov 21, 11 @ 11:57 am
Oops. I am “anonymous” above.
Comment by lincolnlover Monday, Nov 21, 11 @ 11:57 am
The problem with SB512, and with any plan that promotes “defined contributions” pensions systems, is that it is the mother of all “kick the can down the road” policies. We know that some number of employees will make unwise or unlucky investment decisions, so that we will be faced with a substantial number of indigent seniors.
Good alternatives, in my opinion:
1) make pensions (public and private) subject to the state income tax as is other income.
2) require retirees to pick up a fraction of their health care premiums in a progressive manner (related to income).
3) pass an amendment to the Illinois Constitution permitting the legislature to impose a graduated income tax, so that the relatively lightly taxed high income folks in Illinois would pay a more fair share.
Every one of these would be preferable to SB512, in my opinion, and in combination would go a long way, perhaps all the way, to solve the problem
Comment by jake Monday, Nov 21, 11 @ 12:16 pm
==state government that essentially is destroying downstate.==
John, I know that you are running for something but that statement is pretty ridiculous. State gov’t is the only thing keeping downstate alive.
Comment by Bill Monday, Nov 21, 11 @ 12:42 pm
I seem to remember a certain Speaker of the House going on television and admitting that the bill to which he affixed his signature too wasn’t a balanced budget bill. Sounds like a pretty clear violation of the Constitution there to me.
Comment by Just Me Monday, Nov 21, 11 @ 12:46 pm
==2) require retirees to pick up a fraction of their health care premiums in a progressive manner (related to income)==
I wonder if this is constitutional or if it would be considered reducing pensions?
Comment by Robert Monday, Nov 21, 11 @ 1:09 pm
- that statement is pretty ridiculous -
Pretty mild for JB if you ask me.
Comment by Small Town Liberal Monday, Nov 21, 11 @ 1:12 pm
“make pensions (public and private) subject to the state income tax as is other income”
With a floor for those whose pensions are small…
Comment by Plutocrat03 Monday, Nov 21, 11 @ 1:15 pm
I would like to point out 3 things.
1) We do not know if selling bonds for the UI fund will save as much money as the politicians are saying. I do not believe we have sold the bonds yet and they will most assuredly not be a 1% interest rate. I hope I’m proven wrong, but let’s wait and see the facts shall we?
2) Debt restructuring is ok as long as deep pocketed business groups say it’s ok to help save their large members money. Debt restructuring is not ok when it’s businesses that have no cash to give because the State hasn’t paid them. Doesn’t matter that they have maxed out their lines of credit and they are about to be foreclosed on. They should have given more money to Tom Cross and Christine Radogno. I wish those two would step up and become leaders. Maybe they should voluntarily stop receiving a paycheck until businesses get paid what they are owed.
3) To those who are trying to tell us that the debt restructuring of the UI fund and payment to vendors are two different issues, you’re arguments are bogus. Debt restructuring is debt restructuring. Sure it’s two different revenue funds, but it’s all State tax revenue.
Comment by Ahoy Monday, Nov 21, 11 @ 1:26 pm
“… shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.”
How government pension advocates can conjure up a sacred obligation on the part of state legislators to do nothing with bloated government employee pensions out of the above part of the state constitution is questionable. All the quoted section did was make unilateral gov pension changes a breach of contract actionable in court. And that is precisely what the pension proponents want to avoid because the law is replete with circumstances that condone a breach of contract and will lead to reformation and possibly total nullification of the agreements. For instance, fraud in the formation of the agreements due to campaign contributions and other perks from gov employee unions would be an interesting issue, assuming you could find a neutral judge in Illinois, which you won’t because they have a vested interest due to their pensions. Nothing will change until several of the 600 or so state and local gov pensions in IL go insolvent. For now, gov union contributions in, bad legislation and no other action out.
Comment by Cook County Commoner Monday, Nov 21, 11 @ 1:32 pm
I absolutely agree with jake. Retirees should be paying for their health insurance/health care, either through increased share of premiums or higher copays and deductibles.
Comment by 3 beers to Springfield Monday, Nov 21, 11 @ 1:45 pm
As far as any changes to the pensions, including taxing them or paying for insurance, you could make an argument any of those actions is a “diminishment”. Speaking of the insurance specifically, there is currently a test case in the courts involving Joliet city firefighters. A will Co. court ruled that health benefits are protected by the IL Constitution.
Comment by Retired Non-Union Guy Monday, Nov 21, 11 @ 1:47 pm
@Ahoy: Your last sentence from #2 got me thinking that a good (in jest) solution to the bills backlog would be to pay legislators for a given month only once all other bills have already been paid. As the ROE situation highlighted, legislators have no expectation of timely paychecks.
Comment by thechampaignlife Monday, Nov 21, 11 @ 1:52 pm
thechampaignlife,
Very true, if everyone has to wait 6 months to get paid, why should legislators be any different? They should lead by example.
Comment by Ahoy Monday, Nov 21, 11 @ 2:14 pm
Cook County Commoner:
Which member of the Civic Committee are you?
Comment by Demoralized Monday, Nov 21, 11 @ 2:17 pm
Rich, I would be curious to hear the “various reasons” Preckwinkle et al. would have to refrain from suing. The press would savage them, but that has already happened… And if I were them I would sue, win, and move elsewhere and away from the press, which has a short memory anyway.
Comment by Nice Kid Monday, Nov 21, 11 @ 2:58 pm
“I have yet to see one good argument against borrowing to pay off the state’s back debt owed to providers.”
I agree completely as long as the payback period is less than five years, and all proceeds go to the past due bills and/or the pension problem. NO NEW SPENDING!!!
Comment by downstate hack Monday, Nov 21, 11 @ 3:28 pm
==I have yet to see one good argument against borrowing to pay off the state’s back debt owed to providers.==
Agreed. I think the best argument, not a good one but an understandable one, is a mistrust that the money obtained from the borrowing would be actually used to pay state debt to owed providers. With government gamesmanship on funds and general mistrust of political leaders, this argument is understandable if the average citizen has it, but I don’t understand how an elected rep could defend this argument.
Comment by Robert Monday, Nov 21, 11 @ 4:04 pm
Nice Kid,
I would guess Rich might have laid out some reasons to his subscribers. Since I’m not a subscriber, I don’t know and can take a guess.
If I was guessing, the main reason would be the cost of pursuing a case. It would be two people paying for the litigation, not a deep pockets organization (such as a big union or a big law firm) taking on a class action suit. Yes, they may win and get the legal fees back eventually, but that would be many years down the road. A smaller reason might be the fact it would be lousy PR and may even lead to a criminal investigation as to exactly how the loophole was created in the first place … which I’m sure a lot of people wouldn’t want.
Like I said, the above is just a guess.
Comment by Retired Non-Union Guy Monday, Nov 21, 11 @ 5:42 pm