The passage of a landmark bill to address Illinois' worst-in-the-nation pension crisis means the yearslong fight over how to address the massive shortfall now likely shifts to the courts, where its fate -- and much-needed relief for the financially troubled state -- remains highly uncertain.
The passage of a landmark bill to address Illinois’ worst-in-the-nation pension crisis means the yearslong fight over how to address the massive shortfall now likely shifts to the courts, where its fate — and much-needed relief for the financially troubled state — remains highly uncertain.
Lawmakers approved a measure Tuesday to eliminate the $100 billion unfunded pension liability by cutting benefits for workers and retirees. Public-employee unions promised quick legal action if Gov. Pat Quinn signs the bill, which the Chicago Democrat said he will do “promptly.”
The unions argue that the legislation violates a provision of the state constitution that says pension benefits may not be diminished. They criticized lawmakers who voted yes for approving a bill they say is clearly unconstitutional.
“A majority of legislators ignored and defied their oaths of office today — but Governor Pat Quinn doesn’t have to. He can stay true to his oath and the legal promise made to public employees and retirees by vetoing this unfair, unconstitutional bill,” a coalition of unions known as We Are One Illinois said in an emailed statement. “If he doesn’t, our union coalition will have no choice but to seek to uphold the Illinois Constitution and protect workers’ life savings through legal action.”
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But Quinn said he believes the legislation is constitutional and will be upheld by the Illinois Supreme Court.
“It is necessary for the economic good for the people of our state, and I think the court will see it that way,” he said.
Senate President John Cullerton, meanwhile, said the legislation will provide an important test case.
“You can’t find out about the constitutionality of the bill until it’s actually passed,” Cullerton said.
From California to Rhode Island, a number of states have dealt with similar pension troubles — many of which have also wound up in the courts, and with differing outcomes.
Illinois’ Democrat-controlled Legislature has notably lagged behind in finding the political will to deal with its ballooning financial problem. Meanwhile, annual pension payments grew to about one-fifth of the state’s general funds budget, taking money away from schools, roads and other areas.
The measure approved Tuesday emerged last week following negotiations by a bipartisan pension conference committee and then meetings of Illinois’ legislative leaders. They say it will save the state $160 billion over 30 years and fully fund the systems by 2044.
It will push back the retirement age for workers ages 45 and younger, on a sliding scale. The annual 3 percent cost-of-living increases for retirees will be replaced with a system that only provides the increases on a portion of benefits, based on how many years a beneficiary was in a job. Some workers will have the option of freezing their pension and starting a 401(k)-style defined contribution plan.
Workers will contribute 1 percent less to their own retirement under the plan. Legislative leaders say they included that provision, as well as language that says the retirement systems may sue the state if it doesn’t make its annual payments, in hopes of boosting the measure’s odds of surviving the unions’ anticipated court challenge.
In addition to the labor unions, some Republicans said they opposed the bill because it didn’t cut benefits enough. Other opponents said there wasn’t sufficient time for lawmakers and the public to review it.
House Speaker Michael Madigan, a Chicago Democrat, said it was one of the most difficult votes his members have had to take because of the stiff opposition mounted by unions, a traditional Democratic ally.
But he and other lawmakers said the vote — while painful — was necessary.
“I don’t take any joy in this action today,” said Rep. Elaine Nekritz, a Democrat from the Chicago suburb of Northbrook who is the chairwoman of the House pension committee. “Yet it’s the responsible thing to provide a pension system that gives workers retirement security without bankrupting our state.”
JoAnn Washington-Murry, who has spent almost 20 years as a child welfare specialist with the Illinois Department of Children and Family Services, said she may have to delay her retirement because of the cuts. The 60-year-old estimates she’ll receive about $30,000 less in pension benefits over the next 18 years under the new plan. She said she’s upset lawmakers allowed the problem to get this bad.
“We paid our fair share of our pension; it’s the state that has not put in what they needed to,” Washington-Murry said. “People are feeling like they’re just violated, like someone stole their money for retirement.”
Associated Press writers Sophia Tareen and Kerry Lester in Springfield, and Tammy Webber in Chicago contributed to this report.
The bill is SB1.