Lawmakers leave without pension reform

For the third year in a row, Illinois lawmakers adjourned their spring session without agreement on any solutions to what is now a nearly $100 billion shortfall in the state pension system.

The state’s financial outlook will suffer as a result of the stalemate, said David Merriman, associate director of the Institute of Government and Public Affairs.

“We don’t have a sustainable fiscal plan, so in the future, we’re going to have to make difficult decisions. We’re hurting ourselves,” he said.

State legislators considered three bills to change the pension system, but couldn’t reach political compromise before the session ended May 31, said Kappy Laing, university executive director of government relations.

“Nothing got passed by both sides,” Laing said. “The House and Senate just have to have a meeting of the minds on how this can work out. We stand ready to work with them.”

Senate Bill 1, which required public employees to pay 2 percent more toward their retirement and reduced the annual cost-of-living increases for retirees, was defeated in the Senate.

Senate Bill 2404, backed by public labor unions, which would have given state workers a choice in changing their benefits, was not called for a vote.

Senate Bill 1687, which gradually shifted pension costs from the state to public colleges and universities, passed the House but was defeated in the Senate.

With state legislators leaving Springfield, what happens next?

“Everybody’s going to go home, get some sleep and stop being mad at everybody else,” Laing said.

“There will be high-level meetings soon to see if they can find some common ground.”

Legislators in the House and Senate had different philosophies on how to approach the pension system, Laing said.

“The Senate wanted to stay in the framework where employees choose a benefits package from a menu,” she said. “The House felt that it didn’t save enough money and wanted a more stringent package of changes. Both leaders dug in their heels pretty deep.”

It’s likely that the state will have a harder time borrowing money to pay its debts because bond rating agencies will probably downgrade the state’s credit rating for its bonds, said Merriman, professor of economics and public administration.

Business owners will have a hard time planning their fiscal years because they won’t know what their tax obligations will be, and it will be difficult for state agencies to recruit and retain employees, he said.

“This causes a lot of consternation in people’s lives,” Merriman said.

“Making difficult decisions now would be much more preferable now than pushing them off.”