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Illinois Legislature Fails to Act on Quinn Pension Panel

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Jan. 8 (Bloomberg) -- The Illinois Legislature adjourned today without acting on a proposal from Democratic Governor Pat Quinn that would create an eight-member panel to enact changes in the state’s pensions.

Almost five months after failing to take action in a special session, lawmakers didn’t restructure retirement systems that are saddled with a $97 billion unfunded liability.

Quinn’s latest idea would have given broad powers to a commission whose recommendations would go into effect unless majorities of both legislative chambers reject them. Under the proposal, which the governor said was “needed to break the gridlock,” the Legislature’s majority and minority leaders would each name two members to the panel.

“We need a new mechanism or structure to address this issue,” Quinn told the House Personnel and Pensions Committee, which endorsed the measure 7 to 2 earlier in the day.

Illinois has the weakest pension system in the U.S., with 39 percent funding for five major groups of public employees, according to the Civic Federation, a Chicago-based nonprofit research group. Lawmakers have failed to overcome political obstacles to fixing the system.

The commission would have been patterned after a federal panel that recommended military base closings in the 1990s and 2005. It would issue a report by April 30 on how to restructure four state pension systems. The changes would go into effect after 30 days unless lawmakers rejected them.

Union Opposition

Representatives of organized labor testified against the proposal. “It’s a desperate Hail Mary pass,” said Michael Carrigan, president of Illinois AFL-CIO, which represents almost 900,000 union members in the state, according to its website.

Lawmakers are deadlocked on pension changes. The House has before it a measure that would require employees to pay an additional 2 percent of their salaries to get their benefits. It also would delay annual cost-of-living increases by six years, until age 67, for retirees. A coalition of Illinois unions has pledged to challenge that bill in court if it’s signed into law.

The state Senate approved a more limited pension restructuring last year that doesn’t mandate higher contributions. Senate President John Cullerton has said the House approach “most likely violates” the state constitution, Rikeesha Phelon, a Cullerton spokeswoman, said yesterday.

Pension requirements are consuming an increasing portion of annual spending. Illinois devoted $5.7 billion to retirement funding this year and is scheduled to pay $6.7 billion in the next budget year, squeezing other services and programs.

To contact the reporter on this story: Tim Jones in Springfield at tjones58@bloomberg.net

To contact the editor responsible for this story: Stephen Merelman at smerelman@bloomberg.net

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