Thursday, June 21, 2012

Legislative leaders plan to put off pension talks

By Jamey Dunn

Legislative leaders are taking a break from their work on pension reform.

Republicans and Democrats have deadlocked of the issue of shifting pension costs to school districts, universities and community colleges. Republicans say that such a shift would result in increased property taxes. Democrats say that schools, which determine the salary that their employees' pensions are based on, should pay retirement costs instead of setting the pay and passing the pension bill off to the state.

They point to the fact that Chicago pays most of the cost for its teachers’ pensions. Quinn argued that a very gradual shift, over as many as 15 years, could be absorbed by schools without property tax increases. Republicans say that such a shift should be looked at in the overall context of school funding issues and is not necessary to enact pension reform that would begin to address the state’s estimated $85 billion unfunded liability.

Leaders have reportedly decided to take a five-week break from talks to study the cost shift and school funding issues.

Gov. Pat Quinn, who previously called for a bill to be approved by then end of June, urged them not to drag their feet. “I’m impatient with that. I don’t think politics should be what decides this issue,’ Quinn told reporters in Chicago today. “I’m pushing as hard as I can on [this] issue. I did it over and over again today, yesterday, and I’ll do it tomorrow, and I’ll do it every day to alert those who are in the legislation this is not something that you can run in place on. This is a time for action.”

Quinn was vague on the odds of the state experiencing a bond rating downgrade in the meantime. If rating agencies downgrade the state’s credit rating, it could cost more to borrow. Supporters of pension reform have used the specter of a potential downgrade to try and push action on pension reform. “I think there are some good things we have done this year ... so I think the credit [rating] agencies will recognize that,” Quinn said, referring to Medicaid reforms and state budget cuts. However, bond rating agencies have pointed to the state’s underfunded pension system as a possible reason for another downgrade. “Those are good things, but having said that, as long as this pension issue remains out there and not acted upon by the General Assembly ... as long as that is out there, it’s certainly going to affect the decision on our credit rating,” Quinn said.


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