Quick Hit Matthew Blake Monday August 13th, 2012, 6:24pm

Illinois Unions Offer Pension Compromise

With the Illinois General Assembly holding a one-day special session Friday to address the state’s pension liabilities, unions fiercely opposed to pending legislation offered a compromise today.

We Are One coalition members said on a conference call this afternoon that they would let current public employees increase their pension contributions if the state met three conditions: guaranteed funding of the state’s five pension systems, an end to several tax loopholes, and maintenance of today’s benefit level for current retirees.

Cinda Klickna, president of the Illinois Education Association, said that state employees would be willing to pay an extra $168 million a year in contributions. By 2047, these payments would add up to $15 billion more toward the state’s pension funds.

Coalition leaders said the details of this compromise are negotiable and it’s up to Gov. Pat Quinn and the General Assembly to bargain in good faith.

“We have always been willing to be at the table,” said Christine Boardman, president of SEIU* Local 73. “Legislative leaders are the ones that have walked away from the table.”

The push to close tax loopholes piggybacks on a cause that progressive health care advocates championed in their fight against state Medicaid cuts.

Henry Bayer, executive director of the AFSCME Council 31 public employees union, stated that the coalition “identified half a dozen tax loopholes that would generate $900 million a year.”

These are mostly corporate tax loopholes. They include credits to companies like the CME Group financial exchange and exemptions that enable the majority of Illinois businesses to avoid payment of corporate income taxes. Bayer said it was “highly unfair” that public employees must faithfully pay state taxes while so many corporations avoid paying their share.

This year, Gov. Pat Quinn has focused on getting the General Assembly to pass blockbuster legislation that would address an estimated $83 billion in pension liabilities.

The General Assembly appeared close this spring to striking a deal where public employees would be presented a “choice”: Lose their retirement health care or see their annual cost of living adjustment (COLA) increase with simple, not compound, interest. Unlike the We Are One proposal, this plan would include current retirees.

But the deal fizzled because legislative leaders could not agree on whether to shift the cost of educator pensions from the state to school districts and universities.

The Senate passed a limited pension bill (SB1447) that sidestepped the cost shift issue. It provided the COLA reduction or health insurance loss choice to just lawmakers and state government workers. Teachers were omitted from the legislation.

The August 17 special session could result in the House taking up SB1447 or perhaps a more ambitious package that includes all public employees. Quinn would prefer the latter, while unions oppose SB1447 and all other introduced legislation.

Indeed, We Are One has opposed the Democratic governor at every turn, saying his proposals are “unfair and unconstitutional.”

Unfair, the coalition contends, because employees have faithfully made their pension payments while past governors and legislatures depleted the pension fund by borrowing money from it. They say the governor's poropsals are also unconstitutional because the 1970 state constitution declares that state pension payments “shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.”

* The SEIU Illinois Council sponsors this web site.

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