Thanks the Daily Herald and Reboot Illinois for hosting the April 24 Illinois pension forum; and thanks too for soliciting my reaction to the session. While interesting, I am sorry to say that information developed in the forum has not likely changed any minds.
In July 2012, the General Assembly took away lifetime, state-supported health insurance it promised to retired state employees (of which I am one). Now, the legislature aims to also eliminate contractually guaranteed annual cost-of-living adjustments applicable to retiree's pensions. It is certain that inflation will soon skyrocket and retirees will lack the practical protection that a COLA offers.
The combined effect of these two, unilateral, changes will sharply torpedo a retiree's disposable income.
Three things stand out in my mind from the April 24th forum.
1. Rep. Elaine Nekritz, and Illinois Education Association President Cinda Klickna repeatedly charged that Illinois has a "revenue problem" and cavalierly endorsed making the recent 67 percent increase in the state income tax permanent and graduating the state income tax so more revenue could be squeezed from that source. Both parties also said that taxing retirement income should also be considered. Whereas, Ms. Klickna wants new taxes but few pension system changes, Rep Nekritz wants all of the taxes and significant pension reductions as well. (Other legislators endorse new taxes on services and on financial transactions.) In all, legislators seem not to care about the detrimental effect that the state's extant tax structure already has upon individuals and business.
2. The conversation focused upon pensions as if a "one-size fits all" approach was needed. In fact, there are three constituencies (in addition to taxpayers) to be considered: current employees, future employees, and retirees. Current employees should be more resilient and able to withstand and adjust to changes in the pension system. Future employees can look at the system and decide if they want to work in Illinois. (Many needed people will likely just "pass" on working in Illinois if the pension system is unattractive. The downside of this possibility does not seem to have traction in the General Assembly.) The retiree constituency is, in their "Golden Years," now caught up in the middle of something they had never imagined. As an older group that is out of the workforce, they have little or no way to make up for the loss of what was promised them by the state. Oddly, I see no moral outrage that retirees are having their "deal" with the state rewritten, ex post facto, by General Assembly members who caused the pension crisis.
3. While Rep. Tom Morrison came close, none of the forum panelists touched upon Illinois' largest problem. It's not revenue. Instead, Illinois, like the federal government, has a spending problem. The General Assembly for years has permitted wild spending, gross borrowing and a crazy expansion of government-providing programs and services that taxpayers cannot sustain. Legislators might be more credible in asserting that pension-eligible parties must sacrifice if they first took steps to reshape the nature and cost of Illinois government, the design of which goes back to horse and buggy days. With 6,994 units of government, Illinois leads the nation. In 2009, the state had 154,732 workers; and 619,915 others worked for local units of government. It takes a ton of private sector workers to pay for 774,647 public employees. Surely, there is money to be saved here. Additionally, Professor Dick Simpson and others at the University of Illinois-Chicago report that government corruption costs taxpayers $500 million annually. How about tackling that matter?
Certainly, there is a pension problem-which workers did not create. It is unreasonable to cut retiree COLAs to solve it. Reasonable responses include the following: (1) have current state workers to contribute more into the system; (2) increase the retirement age; (3) ask current (and retired) workers to pay more toward health care premiums.
I would not endorse anything further unless and until corruption stops and the state cuts its structure, programs, services, wages, and personnel down to a level that taxpayers can afford.
Charles F. Falk
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