Quick Hit Matthew Blake Wednesday November 7th, 2012, 5:16pm

Muddled Public Employee Pension Referendum Fails

The state’s biggest political issue of 2012 has been growing unfunded pension obligations to public employees, with the shortfall expected to hit $93 billion by next summer. By comparison, the annual state budget is about $33 billion a year.

Considering this, Illinois voters could have been forgiven for thinking that a failed referendum on yesterday’s ballot regarding the approval of pension benefit increases had something to do with these addressing the deficit. But it really didn’t, and neither the referendum’s merits nor its key political backers were ever made clear.

If approved, the referendum would have created a new constitutional amendment that required 60 percent, instead of the current simple majority, of General Assembly members to greenlight increases in public employee pensions. The new 60 percent threshold would have also applied to local governing boards, for example school boards that deal with teacher pensions.

The amendment, ironically, was approved by a simple majority of voters, 56 percent, according to the latest Associated Press tally. But, like all proposals to amend the constitution, it needed 60 percent approval. Alternatively, the referendum could have passed if a majority of all Illinois voters checked ‘yes’, but this also did not happen.

The Illinois General Assembly overwhelmingly wanted the measure to be installed, with the Illinois House voting 113-0 and Illinois Senate signing off 51-2 to place the referendum on the ballot.

But the Chicago Tribune, whose editorial page has lead the charge for so-called pension reform, actually distilled the referendum’s pointlessness in a story last week:

The proposed amendment is aimed at making it harder to approve what's known in Springfield parlance as "pension sweeteners." Those are enhancements, often buried in complex legislation, that end up rewarding a select few people. Because they are contained in more comprehensive measures, those obscure but financially lucrative sweeteners get approved by overwhelming margins — margins even greater than the proposal's three-fifths voting requirement.

A Tribune/WGN-TV investigation revealed several instances of abuse in which union officials and others have benefited from changes in state law to receive exorbitant taxpayer-funded pensions. But even that is a relatively small part of the problem: of $64 billion in unfunded pension liability that accrued from the 1996 to 2011 budget years, $5.8 billion was due to the awarding of benefit increases, a state study released earlier this year showed.

To recap, the rewarding of extra benefits is not a significant cause of the pension-funding problem. And even if it were, the 60 percent threshold would not make a difference.

Progressives might then conclude that the referendum was another cheap shot at public employees, perhaps backed by groups like the Commercial Club of Chicago or the Chicago Civic Federation who have sounded the alarm bells about reducing public employee pensions in the name of greater fiscal good.

But while unions mobilized against the amendment, these big-name groups were largely absent from the fight. As PI reported, the list of supporters for the referendum were either municipalities or local government lobbying groups that did not invest much in supporting the amendment, such as the city of Chicago or the Illinois Municipal League.

Voters interviewed at the polls yesterday on the heavily Democratic West Side of Chicago characterized the amendment as confusing and gratuitously targeting civil servants. Ald. Robert Fioretti (2nd) said the amendment unfairly “changed the process on people” and he questioned the motives behind it.

To be sure, 56 percent of voters who weighed in supported the amendment. But that may indicate a general anxiety about unfunded pension obligations, a problem that basically everyone on the political spectrum acknowledges. With the amendment defeated, Gov. Pat Quinn and the General Assembly lose one distraction in dealing with pensions.

Comments

A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship. The average age of the world's greatest civilizations has been 200 years. Great nations rise and fall. The people go from bondage to spiritual truth, to great courage, from courage to liberty, from liberty to abundance, from abundance to selfishness, from selfishness to complacency, from complacency to apathy, from apathy to dependence, from dependence back again to bondage.

http://www.lorencollins.net/tytler.html

Bob Kastigar
IBEW Local 1220, Chicago

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