State Sen. Heather Steans knows how to get things done in Springfield, but her confidence that Illinois’ pension crisis is a “solvable problem” is worrisome given the ideas Democrats have floated.
That’s even more so given the lack of urgency in the Democrat-controlled General Assembly to address the many other smaller matters that have contributed to the state’s growing pension problem.
Steans, D-Chicago, ably proved what she can do during the spring legislative session. She helped lead the successful effort to pass a bill to legalize the recreational use of cannabis in Illinois. That’s no small feat. But the state’s massively underfunded pension systems is a full-on crisis. Solving that will take courage that lawmakers so far have shown they don’t have.
“I do believe it’s a solvable problem,” Steans said during a panel discussion hosted by the City Club of Chicago on Monday.
But she and other Democrats have failed to come up with proposals that would actually make the situation better. On Monday, Steans suggested raising additional money for pensions, the “consideration model,” changing amortization schedules for the state’s pension funds, and consolidation of local pension funds for police officers and firefighters. The “consideration model” would offer public employees either raise-based pensions or automatic annual increases. It would be one or the other, not both.
Some type of structured consolidation plan, which has the support of the Illinois Municipal League, could help municipalities cope with their unfunded pension liabilities, but it won’t be nearly enough to solve the problem for those systems or the state’s five major pension systems.
The so-called “consideration model” is likely to face legal challenges and the Illinois Supreme Court has made it clear that promised pension benefits can’t be diminished. So that’s a non-starter.
Raising more money for the state’s pension funds would help, but it won’t be easy and it comes with major risks, including higher taxes that could lead to further population losses in Illinois. This spring, state lawmakers raised taxes and fees on everything from gasoline and video gambling to vehicle registration and cigarettes. The General Assembly is also asking voters to change the constitution to allow for a graduated income tax just two years after permanently raising the state’s flat income tax. Taxpayers are fleeing the state in droves because of high taxes and lawmakers dare raise them more?
Worse, Democrats are unwilling to put up a constitutional amendment to repeal the state’s pension-protection clause, the one measure that could actually make a dent in the state’s pension problem.
As Steans pointed out, pension costs are already squeezing out funding for other services. She said Monday that the state spent about 6 percent of its general revenue on pensions a decade ago. When interest is included, pension payments now account for more than a quarter of the state’s general revenue.
Credit-rating agencies have repeatedly warned that extending the pension ramp or borrowing money to pay pension debts could lead to further downgrades for the state’s credit rating, which is one notch above junk status and the worst of any state in the nation.
Saying a crisis is solvable and actually solving it are two different things. And the Democrats existing ideas barely scratch the surface. Steans should follow Chicago Mayor Lori Lightfoot’s lead and call for a change to the constitution to end the pension-protection clause. Maybe she can get other Democratic lawmakers to follow suit.