Illinois GOP abandons its principles on pension funding

When you paid your Cook County property tax bill last week, you may have noticed how much government employee pensions are costing you.

Under the bill's "pension" column, I noted that 18 percent of the property tax levied by my suburban municipality went for pensions. Made me wonder how a business could survive with that kind of cost on its balance sheet.

But I guess that wasn't so bad; 41 percent of the tax levied on my property by Cook County is for pensions. That's the most extreme example, but my tax bill showed other significant pension levies and incurred indebtedness by the multitude of taxing bodies that draw blood from my property. And from yours.

The pile of money going to government employees "who worked hard and deserve" the generous pension that's way beyond the grasp of the rest of us has reached astonishing heights. That's robbing money that should go to educate our kids, feed our hungry, house our homeless, care for our seniors and pave the roads that President Barack Obama claims are responsible for successful businesses. And it's about to bankrupt the state. (Report: Illinois spending more on pensions than on education.)

Whoa. Why are big pension costs run up by local governments threatening the state's financial health?

Good question, and the answer lies somewhere in past political machinations. The deal is that local governments, such as municipalities and school districts, fix the salaries upon which pension benefits are calculated and, generally speaking, the state then picks up the bill. The pension benefit of a retiring local government administrator, teacher or other civil servant is calculated on the last few years of the worker's salary. To balloon those pension benefits, local governing bodies have been graciously and customarily jacking up those last years' paychecks. The resulting generous pension then is increased 3 percent a year to cover cost-of-living increases, even when the cost of living doesn't increase. Compound that pension by 3 percent every year, and many retired public employees will accumulate more than $1 million. Golden years, that.

Soon, the Illinois Legislature will again be debating, in a typically highly partisan manner, how to solve this gigantic problem that just about everyone recognizes, except public employee unions. Questions to be settled include whether the retirement age should be increased to something closer to private-sector levels, whether that 3 percent cost-of-living adjustment should be modified or eliminated and whether employee contributions to benefits should be increased to a more reasonable level.

And one of the most important questions is whether local governments should shoulder more of the burden of the ridiculously generous pensions they helped create.

Now it gets interesting. Republicans typically ballyhoo the principle of subsidiarity — the idea that the most responsible and responsive government is the one closest to the people. Local government, in other words. Important decisions, they say, should be made in the local village hall, not miles away in the state capital or even farther away inWashington, D.C. I agree.

But Republicans, joined by some downstate Democrats, are digging in against Democratic House Speaker Michael Madigan's insistence that more of the pension costs should be shifted to local governments, which have too easily succumbed to employee demands for big pension benefits. Madigan's move is, of course, a political ploy to extract concessions more favorable to the big public employee labor unions that typically feed his campaign coffers.

But Madigan has logic on his side.

You'll usually find me on the side of conservatives who typically adhere to the principle of subsidiarity. But not this time. Republicans are abandoning their principles (and me), by arguing against shifting more pension costs back to localities because it supposedly will financially cripple, if not bankrupt, their towns, schools and whatnot. No doubt it will be a huge burden, but that's where responsibility belongs.

Chances are that Republicans and Democrats won't come together in a compromise this upcoming special session. More likely, they will gutlessly wait until after the November election — just as they have done time and time again.

And Republican lawmakers will brag about how they saved their constituents a crushing new property tax burden. Never mind that they have flushed away their principles.

This column also appeared in the Chicago Tribune

For some ideas on how to reform Illinois pensions, visit the Illinois Policy Institute

For more reform ideas, below a list emailed to me by  an Illinois citizen, Jim Wall, who is fed up with it all. They're worth considering.

  • Align public pensions with those in the private sector.
  • No more early retirements and if you do, just like Social Security that becomes the fixed reduced amount.
  • Immediately stop inflating salaries to enhance pension payouts.
  • Eliminate the guaranteed cost of living escalator. If it is necessary to continue the escalator, use the same percentage used by Social Security.
  • Stop the double dipping by allowing someone to retire in one State Agency only to assume a position in another Agency at top pay and additional pension benefits. If that second agency really needs help, give someone out of a job a chance.
  • Immediately recalculate the formula that allows a State worker (includingLegislators) to collect more money the day after they retire then they made while working. Effective date of today….
  • Shift the Pension burden for local Educators and Administrators to the municipalities that pay them. After all, those municipalities are most responsible for some of the points listed above.  For example, Chicago Teachers want a 30% pay increase which also means a pension increase. If Chicago agrees with the increase or any part of it, then Chicago should be responsible for the associated pensions instead of the State.

 

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