Opinion: Lots of questions, no easy choices for Illinois in pension reform
Monday, May 11, 2015
Crain's Chicago Business
by ELAINE NEKRITZ
The Illinois Supreme Court ruling on pension reform and the game show “Jeopardy!” have this in common: The answers are in the form of a question.
In the case of the May 8 ruling on Senate Bill 1, the pension reform law I helped craft in Springfield, the answer is one question after another. How do we put together a proposal that can keep more than $110 billion in pension debt from crippling our state? Can we balance the rapidly increasing burden of the pension payment with other state priorities? Where do we go from here?
I won't pretend to have those answers. But I do want to cut through the wide range of emotions and reactions that have come out since the ruling and focus on the crucial decisions facing us in the weeks and months to come.
In crafting and passing S.B. 1, the Legislature sought to strike a critical balance between two things: protecting the deserved benefits of state workers and retirees, so they know they will have what they worked for over many years; and preserving the state's ability to provide not only pensions for retirees but also salaries for workers and payments to providers in education, health care, social services and more. It always has been about doing both, not either-or.
THE HIGHEST PRIORITY
To put a finer point on it, before the rollback of the temporary income tax increase in January, the state was dedicating 22 percent of every tax dollar to make its pension payment. The projections for S.B. 1, assuming the tax increase remained in place, would have been about 17 percent—still far more than the average around the nation of less than 5 percent.
However, the Illinois Supreme Court made it abundantly clear that paying for existing pension benefits is a higher priority under the Illinois Constitution than any other obligation of the state of Illinois.
Whatever road we take, the choices do not get any easier. We could extend the time frame for paying off our debt, but then we would further burden future generations of Illinoisans and risk drawing the ire of bond agencies that already have seen a decades-long track record of delay. We could raise taxes. We could make even more cuts to programs for grade school students, families taking care of developmentally disabled children and supports that keep seniors in their homes. We could do some combination of these, or we could do nothing—and pay more and more each year for pensions while we squeeze out resources for schools and service providers.
We will be in Springfield through the scheduled end of the legislative session this month working through our next steps. My hope is we can avoid an unproductive blame game and find answers to these new questions spurred by the court's decision. I will fight for the right balance of priorities as we work on Plan B. Without that, our state's woes will worsen and we all will face the consequences.
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State Rep. Elaine Nekritz represents Illinois' 57th District.