By Jamey Dunn
Members of a committee working to hammer out a pension reform compromise say Gov. Pat Quinn’s public threats about the deadline he set for them tomorrow are “counterproductive” to their work.
After the legislative conference committee on pension was formed at the governor’s request last month, Quinn gave the members three weeks to produce a pension bill. Tomorrow, their time is up. Committee members say they have no plans to present legislation tomorrow. The governor has not said what he will do if lawmakers blow the deadline, only that there will be “consequences.” Quinn told reporters in Chicago today: “It’s time for the General Assembly to put a pension reform bill on my desk. They have had one excuse after another for the last two years. It’s time for them to do their job. If they don’t do their job by tomorrow, there will be consequences.”
Both chambers of the legislature will be in session tomorrow to take up Quinn’s amendatory veto of concealed carry legislation. Despite the governor pushing the issue at several public events over the last few days, sponsors say they are confident they can find the votes to override Quinn’s changes.
Conference committee chair Sen. Kwame Raoul said the group has agreed to use a proposal from professors at the University of Illinois Institute of Government and Public Affairs at the University of Illinois as a framework for their proposal. The plan would swap the current 3 percent compounded annual COLA, which is the largest cost driver in the pension systems, for a COLA that is tied to inflation. Under SB 2591, which a Senate committee took testimony on this week, the COLA would be one-half of the adjusted Consumer Price Index from the previous year. That means that in times such as recent years, when inflation has been low, retirees would receive small COLAs or sometimes no COLA at all. But in years when inflation is high, retirees would get larger COLAs. Employees would also have to contribute 2 percent more of their salaries to their retirement benefits. However, Raoul said that the ideas the committee is considering are not identical to that plan.
Members of the committee say they are making progress, but they need estimates of cost savings, which are provided by actuaries working for the pension systems. “We have been working methodically to try to break from the process that has led to stalemate,” said Raoul, a Chicago Democrat. “What we dream of — of having bipartisanship and working in bicameral manner — we’re experiencing that on this conference committee, and that’s worthwhile in itself. But we have to solve the problem.” Without those numbers, they say they cannot have a clear picture of what the cost savings from a proposal might be. The group has agreed on several potential components of a plan, which they have sent to the systems for number crunching. Once they get the estimates back, they plan to choose from the list as a menu of options that can be pieced together. “You don’t want to do these things without having it actuarially scored. It would be irresponsible,” he said. “It would be irresponsible for us to just propose something by July 9th.” Raoul said the estimates are expected to be completed next week. He said the group might need to get another round of projections once they have a final plan together.
While Quinn talked tough in Chicago today, he declined an invitation from the committee to testify in Springfield. After a bill-signing event in Chicago, Quinn traveled to Springfield and was working in his office during the hearing. He sent instead Jerry Stermer, the director of his budget office. Stermer has been working with the committee as Quinn’s point man on pension changes. While members grilled Stermer about the deadline today, they said that they would have rather put the screws to Quinn. “What is more important for him today? ... He made a choice to send you instead of coming himself,” Raoul said. Raoul’s letter to Quinn gave him the option of sending someone to represent him. “I hate that you’re the person that has to be here instead of the governor himself.” Many of the members of the committee echoed Raoul’s statements, saying Stermer had worked well with the group so far.
Stermer would not get specific about what sort of plan the governor would like the see come out of the committee process. “The governor’s proposal has been and continues to be: We need a comprehensive solution that stabilizes these systems and enables the systems to actually pay the pensions of the people who have earned them, will erase the unfunded ability, get to 100 percent funding and end the squeeze on the major obligations of state government,” he said. He parroted these components as a response to questions from the committee so many times that his repetition eventually drew laughter from the public audience.
Sen. Matt Murphy, a Palatine Republican, noted that many members of the two chambers had very different ideas about what constituted comprehensive changes to the pension systems, and these differences lead to gridlock. Both the House and Senate approved their own pension plans during the spring session, but each failed to pass the plan that came over from the other chamber. Murphy said that if the governor does not get specific on components or at least the amount of savings he thinks are needed, “how do we know whether the plan solves the problem [in his eyes]?” Raoul agreed. “It is important to get a sense from the gentleman who is going to sign the final bill as to what he perceives as fixing the problem.”
Stermer would also not give specifics about what consequences lawmakers face after they miss tomorrow’s deadline. He only said that one of the consequences would be that they would have to explain it to their constituents. Quinn has yet to sign one budget bill, House Bill 214, which is the spending authority for several state programs and agencies. It also contains the funds for state lawmakers' pay. There has been speculation that he will veto the funds for legislator’s paychecks. This would force them to either present a pension bill or override his veto. An override would make great campaign fodder for any potential opponents wanting to claim that lawmakers put their own interests ahead of taxpayers by returning to Springfield to approve their own pay without a pension agreement. A spokeswoman for the governor declined to comment on the rumors, saying only that the bill is “under review.”
Committee members argued that instead of pushing their work ahead, Quinn’s deadline and bluster could put a strain on the negotiations. “We all have that goal, and I think it would behoove all of us to behave in a fashion that would move us toward that goal,” said Rep. Elaine Nekritz, a Northbrook Democrat. Raoul said that Quinn’s prodding is not making the committee rush, but that members do understand that the situation is urgent. “The conference committee is working. We’re not going to finish our work by tomorrow. Whatever, the governor’s consequences [are], that’s fine. We’re going to continue to working whether or not there is a consequence tomorrow.”
But those working for Quinn point out that as lawmakers have failed to get the job done, the unfunded liability has grown to nearly $100 billion, and Illinois has paid the price through higher borrowing costs after being slapped with several credit downgrades. They say the governor is tired of hearing excuses from lawmakers about why pension reform cannot be passed. “He made it very clear to the members that they had three weeks to forge a compromise. It’s their responsibility to do so,” said Quinn spokeswoman Brooke Anderson. “What exactly is there to give taxpayers any assurance that lawmakers will enact comprehensive pensions reform and finally resolve this problem?”
Raoul said the group is getting two different messages from Quinn: the sound bites for the media and their own interactions with Stermer. Quinn’s office made some suggestions that actuaries are also working on. The estimates on Quinn’s proposals will not be complete until July 12. “The reason that I invited the governor was because there was a bit of an inconsistency as to what was being said from his office publicly and the work that Mr. Stermer, the representative of his office, was doing privately. So you want to know which is which. Am I wasting my time with Mr. Stermer and having these discussions? Should I be listening to ... Brooke Anderson? Who’s telling the truth here? The only person who could resolve that — you know, the buck stops at the governor.”
Monday, July 08, 2013
By Jamey Dunn