Pension benefits and state budget

Daily Herald writers John Patterson and Rob Olmstead graphically covered the current tug-of-war between the governor and the State House( "With budget ax in hand, governor orders lawmakers back to Capitol," July 2).

The House rejected Blagojevich's attempt to float another $16 billion in pension fund bonds to refinance the state's gargantuan pension debt.

In 2007, David John, a retirement benefits expert and senior research fellow at The Heritage Foundation, said "The other incredibly irresponsible thing lawmakers do is issue bonds, which Illinois did. If you're trying to get out of a hole, the first thing you need to do is stop digging it deeper."

Two years ago, "Facing Facts: A Report of The Civic Committee's Task Force on Illinois State Finance" noted, "The $45.7 billion unfunded obligation represents an obligation of approximately $3,800 per person for the 12 million residents of the State."

"In the long run," John said, "a change to a defined-contribution plan [such as a 401(k)] would help, but the problem with that is you cannot take an individual who is in a defined-benefit plan and put that person into a defined-contribution plan."

As the governor unsheathes his budget ax to unilaterally punish sufficient interest groups( from seniors to veterans to rape victims) to exercise leverage against legislators to force acceptance of his pension fund plans, a better long-term non-confrontational strategy for resolving this fiscal crisis is to begin offering new hires amongst government workers a defined-contribution plan instead of a traditional defined benefit pension.

Ralph W. Conner

The Heartland Institute

Chicago