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Illinois Approaching Less-Than-Grand Bargain On Pensions


After years of constant dithering and more failed deals than we’d care to count, lawmakers from both parties claim they’ve finally found the solution to Illinois’ worsening pension crisis. The deal, which was first announced last week, would require the state to contribute more to the state’s underfunded pension system, while at the same time raising the age at which workers can retire and still receive full pension benefits. As the New York Times reports, the vote is expected to be held on Tuesday. The stakes are high:

Gov. Pat Quinn, a Democrat who is expected to have a difficult re-election challenge in 2014, has repeatedly put solving the pension crisis at the center of his agenda, and leaving the issue unaddressed would offer endless fodder for a strong cast of Republican candidates who want his job. Rahm Emanuel, the mayor of Chicago and a Democrat, has also vehemently urged lawmakers to change the state system, and, in so doing, to create a model for changes to the deeply underfinanced pension system in his own city, the state’s largest.

Still, in what was perhaps a sign of how politically delicate the issue is, the special session was called for Tuesday, a day after the filing deadline for any primary challenges. That means lawmakers will know which of them might be most vulnerable to an election fight if they approve the measure.

As with all of the plans the state has floated, this won’t be enough on its own to completely solve the state’s problems, but passing it would at least be a major step in the right direction and a sign that the state is taking its pension crisis seriously. Unfortunately, there’s no guarantee that it will pass—the state has been through this many times this year, and each time the deal fell apart at the eleventh hour.

And, as before, powerful groups on both sides are mobilizing against the plan: Labor unions and their supporters have blasted it as a malicious and possibly unconstitutional attack on public workers, while some Republican politicians have criticized it as too timid and are withholding their support. Perhaps this time the crisis has grown so serious that enough people on both sides will put aside their differences and let it through, but given recent history there are no guarantees.

[State Capitol of Illinois image courtesy of Shutterstock]

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  • Anthony

    Sate of Illinois: $100 billion dollar deficit by some estimates…we shall see.

  • Bruce

    How can the state add more money to the pension pie? It doesn’t have any money.

    • free_agent

      The state will raise taxes, or decrease other spending, or quite possibly do both. Or, since “this won’t be enough on its own to completely solve the state’s problems”, in the next legislative session, pension benefits may be trimmed further.

  • ToniTexas

    Unions never, ever agree to give up compensation or advantageous work rules. A 1983 Atlantic story called “Voting for Unemployment” described the choice before union workers at hard-hit US automakers: keep everyone employed at lower pay and benefits, or keep compensation high and accept layoffs. The union chose the latter.

    The difference here is that private firms can go under, as US automakers nearly have. Government never does, and public sector unions never see any reason for taxpayers not to cough up.

    A WSJ editorial lists details I couldn’t find in news stories. E.g., a schoolteacher in his twenties can retire at 60 at 75% pay. This is reform?

  • Andrew Allison

    Yesterday, VM wrote about the impending implosion in Puerto Rico and it’s implications. Puerto Rico’s debt is just 70% of Illinois’, and the latter seems no more able to reform than the former. IL, incidentally, isn’t even in the major league in terms of debt-per-capita (see: Blue is the new red.

  • Kavanna

    The Republican position is correct. It’s not enough, and it’s not clear that anything short of bankruptcy will do the trick. Unfortunately, states can’t go bankrupt in the US legal code.

    This may be the moment the Fed bursts through another clear legal barrier and, after some arm-twisting, starts buying municipal debt. Can’t have the home state (and home city?) of The One go bankrupt. Another bailout is in order.

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