Collywobbles? Say what?

So what if we have a budget…there's always those teachers!

More Collywobbles from the Tribune Editorial Board

(Collywobbles: discomfort, fears, and anxieties)

Tomorrow, May 31^st, may prove the end of the General Assembly’s legislative session in Springfield, but it might also be the first balanced budget agreement between the legislators and confrontational Governor Bruce Vincent Rauner in three years.  Late news indicates or promises that the four deliberative caucuses are moving along toward a balanced offering for the Governor.  Of course, the Governor, who makes it a habit of moving goal posts at the last second may disagree with the observations of media and insiders to the process by tomorrow.  Rauner may pretend happiness with the final result in his current election year, or he may argue a forced necessity to sign it after two years of his own fiscal destruction of university programs and services for the needy, or he may announce unwillingness once again to sign anything “’comin’ from those bought and paid for Madigan stooges.”

The Tribune Editorial Board is an easier prediction.  Whichever way the final result breaks, the oak paneled clan of critics will not support the decision. Nothing will be enough for the writers of the last pages of the constantly shortening daily until the legislators do what is legally and morally impossible – “passing legislation to deal with the state’s alarming pension debt,”  “negotiated changes to programs that would make Illinois more business and tax friendly,” and “drop the earlier increases in the state income tax.” 

In the run-up to tomorrow back in February, the Tribune Editorial “Illinois lawmakers face a challenge. Best to head home and campaign,” the opinion disparaged the lawmakers once again for not taking up the opportunity to reduce the unfunded liability owed to the pensions after decades of not paying the state’s share by once again ignoring the clear and forceful language of the Illinois Supreme Court’s conclusion in May of 2015:

“¶66 …The General Assembly had available to it all the information needed to estimate the long-term costs of those provisions, including the costs of annual annuity increases, and the provisions have operated as designed.  The General Assembly understood that the provisions would be subject to the pension protection clause.  In addition, the law was clear that the promised benefits would  therefore have to be paid, and the responsibility for providing the State’s share of necessary funding fell squarely on the legislature’s shoulders.  Accordingly, the funding problems which developed were entirely foreseeable.  The General Assembly may find itself in crisis, but it is a crisis which other public pension systems managed to avoid and, as reflected in the SEC order, it is a crisis for which the General Assembly itself is largely responsible.”

“Instead, the Tribune blamed the General Assembly of 2018 for not seeking to find other ways to illegally short pensioners.  “He (Rauner) also called for broader pension reform, which lawmakers have largely ignored since May 2015. That’s when the Illinois Supreme Court rejected cost-saving pension changes that had been signed into law. The ruling, however, should not have been the last word. Lawmakers could and should have been sending proposals back up the flagpole to see what the court might accept — including Senate President John Cullerton’s suggestion that pension benefits could be changed, constitutionally, if retirees got something in return. But the legislature has not pushed that or any other proposal.”

In his opening budget speech this spring, Rauner cited New Jersey as an example of a state that was able to off-load much of its debt by offering a plan of consideration in exchange for a stabilized pension promise.  The Tribune Editorial Board clings to that concept as well, often pressing together Cullerton’s earlier attempt with Rauner’s interest in pursuing it. But neither the Governor nor the Tribune Editorial Board seems aware of the lack of explicit constitutional protection for the public workers in New Jersey.  There, the courts provide protection for public pension benefits based only on impairment of contract principles which can be determined “substantial.”  Taking a look at Article XIII, section 5 of the Illinois Constitution is quite another matter – “Membership in any pension or retirement system of the State, any unit of local government or school district, or any agency or instrumentality thereof, shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.” 

Nor would it seem that the Chicago Tribune Editorial Board or the Governor has spent much interest in scrutinizing the decision rendered by the ILSC in May of 2015. Instead, it’s been full speed backward:

“The state’s unfunded pension liability is growing faster than taxpayers’ ability to keep up. With about a quarter of general fund revenues going to the pension system, other priorities get crowded out.

“No matter how we got there, today’s pension crisis isn’t a funding problem. It’s a benefits problem. To borrow one of Rauner’s preferred adjectives, the shortfall — and lawmakers’ reluctance to seek solutions — is “’outrageous.’”http://www.chicagotribune.com/news/opinion/editorials/ct-edit-rauner-speech-pensions-budget-20180214-story.html

Not a benefits problem at all.  Never was and never will be.  The issue is the enormous unfunded liability, the amount of debt building due to decades of not paying what was owed and using public workers pension funds as a credit card for pet projects.

Tiers may be added and buy-outs offered; but that debt will always remain due.   

Ironically, Chief Legal Counsel for John Cullerton Eric Madiar and architect for the “consideration” model Rauner wants on his desk as soon as possible denies the Tribune’s argument that it does not matter “how we got here,” and that “benefits are the issue.”

In an address to the Chicago Civic Club, Mr. Madiar reminded the audience, “Our current pension disaster cannot be blamed on salary or pension cost increases.  Between 1985 and 2014, pension-funding liabilities grew by $97 billion.  Benefit increase only counted for 8%, or $8 billion of that growth.  Pay increases were actually less than actuaries had assumed they would be. And they actually helped bring down the unfunded liability by $1.3 billion.  The state's failure to fund the system accounts for 49 or 47% of that growth.  So simply put, the main reason we are in this mess is for insufficient pension contributions.”

“Between 1989 and 1994, the unfunded liability doubled which was causal for the development of the payment plan called ‘the ramp.’  This became the schedule as a result of the run for Governor between Netsch and Edgar.  Also some pension holidays in 2006 and 2007. We had a tremendous growth in our unfunded liabilities beginning in 2007. We had about 35 billion in unfunded liabilities in 2007, and we have gained another $63 Billion in unfunded liabilities since that point. In 1984, Illinois had liabilities of $7 billion; we currently have $105 billion.  That $97 billion (liability’s) biggest contributor - the state did not contribute enough.  Actuarial assumptions have changed as the percentage of returns on the stock markets have been reduced, that has increased the amount in unfunded liability.  But you cannot lay it at the feet of benefit increases coming between 1985 and 2014...and you cannot lay it at the feet of salary increases either.”

They won’t be happy – Tribune Editors Dold, McCormick, Dillon, Lythcott -

They’ll argue that our politicians are “avoidance experts.”  They say they “tinker” but do little more.  They will never say what is true: We’re stuck in an antiquated system that is revenue deficient.  One that needs a structural change in order to free the poor, affirms educational opportunity, pays the State’s bills, and provides for a growing economy. That we need to amortize the debt payments rather than ride the balloon payments designed in 1995.  But they won't.

In the end, my money says they’ll stick with Rauner for Governor too.