Quick Hit Ellyn Fortino Monday July 15th, 2013, 1:52pm

Sen. Biss Discusses The State Of Illinois Pension Reform At Heated Public Meeting

Emotions ran high at State Sen. Daniel Biss’ (D-Evanston) public meeting on pension reform that brought out some 200 retirees, state workers and concerned Illinois residents Sunday afternoon in Evanston.

During the spring legislative session, the Illinois legislature fumbled on a measure that would help address the state’s nearly $100 billion in pension debt, which threatens funding for education and other core services. The state’s failure to pay its share of pension payments in the past is largely to blame for the ballooning debt.  

Biss sits on the Illinois General Assembly’s 10-member pension conference committee, which was put in place in June to cobble together a compromise bill.

Those at the meeting pressed the senator on when the group would have its pension proposal ready. And they were also adamant about bringing in more state revenue by closing corporate tax loopholes and implementing a progressive income tax in Illinois.

“We have a revenue problem, not a pension problem,” Bloomingdale resident Karl Gabbey said at the meeting. “Please do not blame the public employees ... public employees are taxpayers too just like anybody else.”

Gov. Pat Quinn handed the conference committee a July 9 deadline to draft pension reform legislation, which the lawmakers failed to meet. Due to the legislature's ongoing inaction on the issue, Quinn suspended the pay for Illinois state lawmakers the day after his imposed deadline. The governor also said he would not accept his salary until a comprehensive pension reform solution lands on his desk.

So far, the conference committee has met three times in public. It is currently looking at a pension proposal focused on the State Universities Retirement System that was put forth by the University of Illinois’ Institute of Government and Public Affairs. The proposal’s central feature includes changing the 3 percent compound interest on cost-of-living adjustments (COLAs) to one-half of inflation.

Biss said the proposal has garnered strong interest from all caucuses on the committee, and the group is looking at ways to adapt the plan for other retirement systems. According to Biss, the committee members are working through legal questions and gathering feedback from stakeholders and input from actuaries regarding the proposal’s fiscal impact.

“Why do you think that it’s a good idea, going forward, for me to get half of the actual cost of living every year,” one state employee asked the senator. “Is it your plan for me that at 75 I’m going to have to go back to work?”

Biss explained that when inflation is less than 3 percent, the current compounded interest on COLAs is a good deal. But in late 70s, for example, when inflation was in the double digits, “It was a horrible deal.”

In regards to a timeline, the committee could offer up its proposal within the next month, Biss said. Given the pace at which the actuaries work, it is more unlikely, he said, that a bill would reach the governor’s desk any time in July. But, Biss added, “Hopefully we don’t find ourselves doing this in September.“

When asked whether the governor’s pay suspension would constructively enhance the political pension debate going forward, Biss said, “If it’s a kick in the pants to some legislators, I guess that helps.”

The pay suspension will hurt the committee’s progress if it becomes a distraction, he added. What will help move the pension issue forward, he said, is honest discussion about the broad nature of the state’s fiscal challenges.    

“I think the more public, honest discussion we have, the better. And I think it’s important that we try to have these discussions is such a way that they’re not in a vacuum,” the senator said.

Also, throughout the pension debate, some have characterized public employees as overpaid and lazy, and that “damaging discourse” needs to stop, Biss added. That unfair notion is “poisoning our society,” he stressed.

Many people at the meeting said they wanted to see a progressive income tax in Illinois as a means to address the state's fiscal challenges; although that idea also drew some boos from the crowd. Biss is in support of a constitutional amendment that would allow for a progressive income tax in the state, saying, “It is clearly the right thing to do.”

But in order to amend the state's constitution, both the House and Senate would have to pass a resolution with supermajorities to put a referendum on the ballot that seeks to change the income tax, he said. And overall, it is quite difficult to pass a constitutional referendum regarding taxes, Biss said.

“We have a long fight ahead of us,” he explained.

The senator is also in favor of broadening the sales tax base and closing corporate tax loopholes, but he said the opportunity to act on these various changes would be enhanced if a pension reform bill was passed first.

He also stressed the importance for any pension proposal to include a funding guarantee, ensuring that the state pays its fair share. Regardless of what is done to change pension benefits or state taxes, without the “confidence” that the state will make its payments going forward, “we’re going to be in trouble,” he said. The funding guarantee is still up in the air, and it is crucial to address this issue in the public context, Biss noted.

David Lavan, an assistant professor of engineering at Harper College, told the senator that he has not given up hope on SB 2404, the pension bill that passed the Senate in May and was backed by the We Are One Coalition of labor unions. During the spring session, the House never voted on the Senate bill, while the Senate voted down the House’s proposal, which was pushed by Speaker Michael Madigan.

“Why aren’t we putting more energy into (SB 2404),” Lavan asked. “Isn’t this consistent with what you’re saying, let’s get the ball rolling with a bill that has buy-in from one of the most important stakeholders? Why not support that? Why not give that a bigger chance?”

First, Biss said the We Are One Coalition deserves “a massive amount of credit” for their work on the issue.

“There is a lot of tension all around the table, and the We Are One Coalition deserves a lot of credit for being more flexible than most,” he said.

But,  Biss said, he did not vote for the measure in the Senate, because he was not confident that the bill provided enough savings.  

In order for the state legislature to pass a pension solution, the conference committee has to produce something that is neither the Senate proposed plan nor the House bill. If the committee were to report back with SB 2404, the measure would, again, not be called for a vote in the House, Biss said. And the Senate would shoot down the House plan, SB 1, if it were put forth a second time, he explained.

For both chambers to pass a pension measure with majorities by this summer, the committee has to come up with a plan based on a new framework that is not fundamentally one or the other plan and achieves various policy goals from both proposals, Biss said.

When questioned on his stance regarding shifting the employer pension payment to local school districts, Biss said he is opposed to making districts pay back already accrued debt.

“I would oppose making this holistic payback, period,” the senator said. “The state racked up that debt, and the state will pay that debt.”

But in the end, Biss said there is some logic in shifting the cost to school districts if it is done gradually.

“I don’t mind starting soon, [but] what I mind is doing it too fast,” he said. “If you do it truly gradually, you give the districts the opportunity to plan around it. If you dump it in their lap tomorrow, it’s not going to be pretty.”


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