Political Rewind: All Quiet in Springfield a Week after Pension Reform Fails

As we start a new week, it's always good to get caught up on state politics. Here's an easy guide to what happened last week.

Editor's Note: This article was created by aggregating news articles from Illinois Watchdog, formerly Illinois Statehouse News.

IL: Week in Review — All quiet in Springfield a week after pension reform fails

SPRINGFIELD — Things were mostly quiet here a week after lawmakers failed to reach an agreement on comprehensive pension reform during a special legislative session.

Rutherford: Pension inaction could have ‘very serious impact’ by year end

State Treasurer Dan Rutherford sounded the alarm on Illinois’ financial crisis Friday, after a Moody’s report said lawmakers’ inaction on pension reform continues to be an issue for the state’s credit rating.

“I know we keep hearing these things about potential downgrades … but the fact is it is now to the point that (the credit rating agencies) are repeatedly saying this. The inaction on Friday helped substantiate the fact that these entities are very, very serious about this,” Rutherford said.

“I’m not sure that the General Assembly really understands what a downgrade could mean. I’m relatively sure the general public probably doesn’t deep down understand what it means.”

Moody’s lowered the state’s general obligation bond rating to A2 in January because of the state’s failure to address pension underfunding and delays in paying its bills. Downgrades affect the interest rate at which Illinois can borrow money.

In a report Friday about the state’s plan to issue $50 million in general obligation bonds in September, Moody’s said its “stable” outlook for Illinois acknowledges the state’s ability to reach consensus on a temporary tax increase in 2011.

However, Moody’s said, “it remains to be seen whether the state has the political will to impose new pension reforms and other measures that restore fiscal strength in the near term.”

Gov. Pat Quinn has warned that the state’s credit rating could be downgraded further, if lawmakers can’t address Illinois’ unfunded pension liability, which is believed to be $83 billion but could be $130 billion or more under new accounting guidelines.

Rutherford said he believes that if lawmakers don’t approve pension reform at least by the end of the fall veto session, “that it very well could have a very serious impact by the end of the calendar year.”

“The problem with this is it isn’t seen as serious. It doesn’t affect today. If there’s a downgrade and it costs the taxpayers of Illinois more money to go into capital bonding, in a sense I think the attitude is, ‘OK. So what?’” he said.

“Well, here’s the ‘so what:’ It will cost the taxpayers of tomorrow even more money. It’s the generation that’s coming next. And the stewards of today’s government need to be responsible for that.”

Class-action status sought on state retiree lawsuit

A group of state employees is seeking class-action status for a lawsuit it filed last week against the state of Illinois, alleging a new law that changes health-care premiums for retirees violates the Illinois Constitution.

The lawsuit was filed Aug. 14 in Randolph County Circuit Court in southern Illinois. The 11 plaintiffs are seeking class-action status that would include all state workers and retirees.

The lawsuit challenges Senate Bill 1313, which had bipartisan support in both houses of the Legislature and was signed into law by Quinn in June. The law requires retired state workers, university workers, lawmakers and judges to pay their own premiums for health insurance, and the director of the state’s Central Management Services is charged with establishing a schedule of premiums for retirees.

Previously, the state picked up the tab for the premiums for state and university employees who retired after 1998 and worked for the state for at least 20 years, as well as premiums for those who retired before 1998 and had eight years of service. The retirees had to foot their own deductibles and co-payments.

The lawsuit says the law violates the state constitution and union contracts that are in place.

A similar lawsuit is pending in Sangamon County, where retired Appellate Judge Gordon Maag has asked that the law be declared unconstitutional, as well. He, too, is asking that the lawsuit be given class-action designation.

State GOP continues call for voters to ‘fire’ Madigan

The Illinois Republican Party’s calls for voters to “fire” powerful House Democrat Michael Madigan are heating up ahead of the November election, but whether the campaign will work remains to be seen, one observer says.

“Mike Madigan is a very durable politician. He’s very smart, and people have come at him before and tried to make him an issue and haven’t succeeded,” said David Yepsen, director of the Paul Simon Public Policy Institute at Southern Illinois University in Carbondale.

The Republican Party, which is the minority party in the Legislature, is trying to capitalize on low approval ratings for Madigan and state lawmakers in general to attract votes in November. The GOP may not succeed in gaining control of the Legislature, but it could gain seats.

The key is linking all Democrats to Madigan, a powerful longtime Democratic Chicago lawmaker who is known to most Illinois voters.

“What this is is Republicans in Illinois saying that a vote for a Democrat in the Illinois House is a vote for Mike Madigan. If the Republicans can take control of the House, Madigan is out as speaker,” Yepsen said.

“This is not a new tactic. What’s new here is the environment and the antipathy toward Springfield and the problems that exist. People in Illinois do know who Mike Madigan is. Maybe this is the year (the tactic) works.”

The state Republican Party repeatedly has painted Madigan as a leprechaun, a reference to his stature and heritage, who “stole Illinois taxpayers’ pot o’ gold.” Now the party’s leaders are asking the federal government to investigate thousands of dollars in donations from a union to a Madigan-controlled campaign fund leading up to Friday’s do-nothing special legislative session on pension reform. It was quid pro quo to kill reform efforts, the GOP charges.

“Mike Madigan might as well hang a ‘for sale’ sign from the dome of the state capitol,” Illinois GOP chairman Pat Brady said in a news release Tuesday. “This clearly does not pass the smell test, and it merits investigation by federal authorities.”

A Madigan spokesman said Republicans have tried to oust the speaker for 25 years unsuccessfully, adding that Republicans killed the pension bill before the House even convened last week.

“They’re not giving anybody a reason to vote for Republicans,” spokesman Steve Brown said. “And that’s the first thing you need to do.”

— Jayette Bolinski

Renate Meyer August 26, 2012 at 01:44 PM
When you give us news on a vote outcome, why don't you post how our elected officials voted. We could then determine if they are truly representing us, r themselves.
patty August 26, 2012 at 01:49 PM
The upshot? "The Republicans killed the pension bill before the house even convened last week." Looks like the Leprechan lives on...
J Adago August 26, 2012 at 01:54 PM
I can't believe I'm going to use the French as a positive example for how to handle out of touch leaders, but I'm starting to realize why they just walked these people up to the guillotine.
RLuds August 26, 2012 at 05:47 PM
The state needs to go bankrupt. Then they can renegotiate all the state contracts. Mike Madigan need to go
Truth2Search August 26, 2012 at 06:44 PM
Patch is a login pain and this may be a duplicate, but... states cannot legally go bankrupt. Laws only allow municipalities and counties to go bankrupt. The problems here stem from voters here who have no clue and the devious so-called leaders who pander to these voters.
Joseph O'Shaughnessy August 27, 2012 at 03:50 AM
So the state employees now pay their own health care. And we want them to...what...pay their own pensions? Why would anyone work for the state, keep track of your licenses, file your grievances, keep track of your tax refunds, help you incorporate? Why would someone work for a corporation that would make them suddenly pay their own health care and steal their 401K? Why would you do that? I know. For the same reason that you would work for the state. Because you're stupid. If someone tried to do that to me, I'd quit. Then I'd go burn their house down.
Doremus Jessup August 27, 2012 at 01:09 PM
The Democrats and Republicans are playing a game, the state is taking money in hand over fist according to Illinois Department of Revenue. http://www.revenue.state.il.us/AboutIdor/TaxResearch/JulyFY2013RevenueReport.pdf The state collected 144.4 million dollars more this July over last July, when you consider the increase in Individual and Corporate income taxes were in effect last July this is remarkable. The game is to convince the electorate to keep the "temporary increase in the income tax, at the same time crying poor mouth so the state and municipalities can try to renegotiate and pay less to state and municipal workers. Where is all this increase in tax collections going? Have we payed off any bonds? Have we payed bills that where in arrears? We keep reading that Illinois has an unfunded pension liability of 83 to 130 billion dollars, is this figure legitimate, when is it due, is it due next Tuesday, over the next 5 years, 20 years. I am suspect when numbers are thrown out willy nilly without any context of the time frame. The politicians want to keep the income tax level where it is but none of them want to pay the political price to do so. I suggest for the sake of argument we assume that the current levels of the big three(sales, income, corporate income) were derived at fairly and each one if to be reduced should be done so equitably. I don't believe the Individual income rate will go back to 3 percent but it probably doesn't need to stay at 5 percent.
DG Guy August 27, 2012 at 01:23 PM
Nice post
Paul August 27, 2012 at 01:42 PM
Joseph, I have been working in corporate america for 35 years now and hate to break the news to you, but most employees at most companies pay for there health insurance. They don't pay the whole thing but a share of it. Also, no one can steal a 401K. The state employees along with teachers are talking about there pensions which brings up another point, most companies do not even offer pensions anymore in the private sector.
Joseph O'Shaughnessy August 27, 2012 at 02:36 PM
I always appreciate learning things, especially "breaking news" such as that employees pay (some, not all) of their (not "there") health insurance. I too worked for a living before owning my own companies, and my brain has surprisingly not congealed. Pensions are distributive returns on invested funds...paid in by employees and matched by the organizations for which they work. The 401K is basically a tax device to create investment savings accounts which will be taxed at a (in some cases) slightly lower rate at, let's call it maturity. So whether you steal my pension or you steal my 401K, it is theft. I do congratulate those who worked for 35 years or more for other people. Work does have a certain nobility. On the other hand if you agree to work for pay and a pension...and you lose your pension or have it reduced substantially (or a 401K, which you can also lose) you might be less sanguine about employment.
Cincinnatus August 27, 2012 at 08:37 PM
If you click on the links to the bills, scroll down and click on the resultant page link called Third Reading. Patch articles bridge many different legislative districts.
Cincinnatus August 27, 2012 at 08:40 PM
There is no provision in US Bankruptcy Code for a State, although Chapters 8 and 10 are open...
Dan August 28, 2012 at 03:11 AM
Joe while you may end up paying taxes at a "slightly lower rate" on your 401 k in the future those with a pension will pay no state income taxes on the income they will receive. For some blessed with nice pension income this can amount to a million dollars or more in Illinois tax free income. Step one in pension reform should be to tax pension income like many other states do.
Joseph O'Shaughnessy August 28, 2012 at 02:54 PM
I am not really concerned whether some clerk in a government office will pay no taxes or little taxes on a state pension that he or she earned. Either there was a contract and we live up to that contract or we become liars and dissemblers. We already have enough liars and dissemblers in this country...espeically those who think that having the audacity to live for an additional 20 years at a retirement income that is in practice already half of what was earned...is too much. Get a damned education and some ethics. Or move to Wisconsin.
Mark Lukas August 28, 2012 at 04:51 PM
It's not just "some clerk" we are concerned about. It's tens of thousands of State retirees that were promised unreasonable benefits that we can no longer afford. Many of these retirees earned six figure incomes. Their unions voted in politicians that created an unsustainable system to reward them for their votes. Virtually no retiree outside of government gets life time health benefits and the formulas used to set the pensions are far too generous and are filled with loop holes to greatly boost pension payouts.
Joseph O'Shaughnessy August 28, 2012 at 05:11 PM
"Many" of these retirees earned six figure incomes...how many? And if they earned six figure incomes...are you jealous? Are you worried that someone actually made a living? These are Republican talking points, passed along to the ignorant to do exactly what the group ALEC has been doing for years...promote lower taxes and fewer regulations for corporations. Cut a pension...save a billionaire a dollar. Foolish logic. The average person in Wisconsin who had their incomes cut by $4000 a year made $46,000. And you are wrong about retirees and their incomes. There are many large corporations who still retain pension programs. Government employees often get retirement benefits that combine or obviate Social Security or Medicare benefits. It is always the blowhard who "knows" that there are "many" who doesn't really know what is going on. Check who the reps are for ALEC in the state legislature. And then see who is railing against the pensions. Then come back and give us the benefit of your "expertise." By the way, I haven't been union since the days i worked my way through my undergraduate education, but if it weren't for unions, you'd be working a 7-day, 12-hour workweek.
David Equinstein August 29, 2012 at 02:02 PM
Here's a quick way to cut government spending eliminate township government which is duplicated with every surrounding county, city, etc. And cut the salaries of the Forest preserve Commissioners and President. The 6 Part-Time Commissioners from the Forest Preserve District of DuPage County each get paid $53,500 a year plus full-time benefits and a taxpayer subsidized pension for maybe 1,000 hours a year and they just sit there! Not one of the Commissioners has said a word at the meeting about the FBI's investigation. Here is one of the articles http://elmhurst.patch.com/articles/fbi-investigates-dupage-forest-preserve-contracts-a19cbfe2#comments_list about the investigation that the DCFPD President Dewey Pierotti keeps saying (even yelling at citizens on 8/14) that there is no investigation. We need new Commissioners at a pay of maybe $25,000 a year.
Joseph O'Shaughnessy August 29, 2012 at 02:41 PM
I am not necessarily an advocate for cutting people's pay, but there is a difference between payment and corruption....corruption being featherbedding or payoffs. I'm concerned about statements that Pierotti made involving a private meeting with Dan Cronin. Cronin is a close ally of Kirk Dillard and Dillard, from Hinsdale/Oak Brook, is the ALEC representative in the Illinois state senate. If anyone were going to shut down a public facility...one of the truly great public features of the Chicago and Northern Illinois area, it would be ALEC. ALEC's members, like BP Oil and EXXON/MOBIL, Home Depot, and similar International organizations (look up ALEC EXPOSED on the Internet) is paid by them to shut down taxpayer funded things like Forest Preserves to save money in order to cut taxes for corporations. This is just a fact and you can easily look it up. So the fact that there was a meeting between Cronin and Pierotti and no one else, suggests a scenario where Pierotti is told that he will be taken care of by the Republican Party in return for something. Of course that is pure speculation. But if it were true, then why? Well, one huge cost that could be saved in state and county government is the shutting down of the DuPage Forest Preserve. Once you shut it down....the land is up for grabs.
Ernie Knight August 29, 2012 at 03:45 PM
Dan, Illinois exempts from income tax, distributions from qualified retirement plans, not just pensions. If you are retired and drawing from your 401k, that is not taxed. Neither is Social Security. Pension holders are not being given more favored status by the Illinois income tax code.


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