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posted: 10/30/2012 5:00 AM

Editorial: The need for a team approach on pension reform

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The Daily Herald Editorial Board

The word from within the Illinois governor's office last week was ominous: "Let your imagination run wild" as to what will have to be cut if something isn't done about pensions. The response from the unions was not particularly imaginative. To paraphrase: "Don't cut our measly pensions; quit giving out tax incentives to fat corporations."

It's a common refrain and not entirely without merit. But come on, the relentless arithmetic of the pension problem is bearing down on our state and, as has been pointed out many times and -- as Abdon Pallasch, an assistant budget director for Gov. Pat Quinn, reiterated for our editorial board last week -- if not dealt with soon, we won't be talking about just cutting state programs, we'll be talking about gutting or eliminating them.

Public employees won't be talking about just seeing their pay and pensions reduced; they'll be talking about losing them altogether in a bankrupt state.

A commission headed by former Fed Chairman Paul Volcker and former New York Lt. Gov. Richard Ravitch added its authority last week to this common refrain. Noting that Illinois' 43.4 percent funding of its pension system is the worst of any state in the nation, the task force said, "Without some type of reform that reduces costs going forward, (Illinois') systems appear destined for insolvency. The culture of budget gimmickry and shortsightedness pushes costs off to the future, but eventually that will be impossible -- retirees may lose their pensions as funds dwindle."

Did you catch that key phrase? "Culture of budget gimmickry and shortsightedness."

Perhaps that brings to mind some of the so-called solutions already on the table in Springfield -- most notably the cost shift of pension responsibility to local districts and the simplistic proposal on the Nov. 6 ballot that pretends to make it harder to approve pension increases. Although they may have a place in the ultimate solution, neither of these ideas addresses the key issues facing the state today -- just two among many being a history of excessive borrowing to make pension payments and at least $83 billion in unfunded liabilities.

Even more telling are the words a Bloomberg News Service story used to describe the Volcker-Ravitch report, blaming the group's dire outlook for Illinois on the state's "politicized budget process."

That process is indeed the heart of the monster facing us. As the union response to Pallasch's remarks demonstrates -- not unlike some Republican responses to other Quinn proposals, by the way -- it is growing increasingly obvious that as this crisis deepens, people just aren't talking to each other. They're talking to the press and to their own interest groups, but they're not sitting down together to ask what they themselves are going to contribute to the solution.

Pallasch's statewide editorial board tour appears to be some sort of warm-up to a postelection grass roots movement Quinn wants to get started that will somehow pressure the unions to accept serious cuts in their pensions as well as substantial wage and benefit concessions in upcoming negotiations.

However reasonable that strategy may be, one still wonders if instead of all this politicking, the various interests shouldn't start regularly meeting with each other and address the problem with the realization that every competing interest has legitimate claims but that every interest also must sacrifice something in order to avoid a crisis that will consume them all.

To be sure, the entire mess cries out for comprehensive, not piecemeal, reform of the pension system. And that is never going to come if participants are merely reacting to each other's threatening, self-serving and, yes, commissioners Volcker and Ravitch, shortsighted proposals.

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