House Speaker Michael Madigan (D-Chicago) speaks to lawmakers Thursday while on the House floor where he passed legislation to tackle a Goliath-sized public-employee pension deficit. (AP Photo/Seth Perlman)
With reporting by Zach Buchheit
SPRINGFIELD-The Illinois House Thursday narrowly backed a bi-partisan pension-reform package pushed by House Speaker Michael Madigan in a move Gov. Pat Quinn called "the biggest step to date" in solving the state's nearly $100 billion pension crisis.
After a sober, hour-long succession of speeches mostly favoring Madigan's plan, the House signed off on his push 62-51, with six members voting present. Sixty votes were needed for the speaker's measure to clear the House. It now moves to the Senate.
"This bill has been worked assiduously by many, many people. Obviously, it does not meet every request. Obviously, it does not make everybody happy," Madigan said as the bustling House chamber quieted during his pitch.
"I think we're all familiar with the severe fiscal problems of our state, and the fiscal problems of the pension systems are a large, large part of that problem. In my judgment, this is a critical action that must be taken now. It must be taken for future budget making. It must be taken for the fiscal wellbeing and reputation of the state of Illinois," Madigan said.
Twenty-two House Republicans sided with Madigan's push, with Democrats accounting for the rest of the "yes" votes. Among the Republicans backing the plan was House Minority Leader Tom Cross (R-Oswego), who signed on to Madigan's legislation as a co-sponsor.
Cross said current and retired state workers, university employees and downstate and suburban teachers had every right to be "mad as hell" that the state's pension systems are in fiscal ruin and bore no blame for the worst-in-the-nation mess.
While acknowledging the hurt being inflicted on them, Cross went on to describe Madigan's approach as the only way to restore financial stability to the state and ensure the state's pension systems exist into the future.
"It provides certainty to employees. It provides certainty to annuitants," Cross said. "You may not like it. But it provides certainty you will have a pension."
No sooner than the roll call was locked in, Quinn heaped praise on the House's action.
"Today the Illinois House of Representatives took the biggest step to date towards restoring fiscal stability to Illinois," the governor said in a prepared statement.
"With the passage of this comprehensive pension reform solution, Illinois is closer than ever to addressing a decades-long problem that is plaguing our economy, our bond rating and the future of our children," Quinn said.
Now, the focus shifts to the state Senate, where a similar approach fell seven votes shy last month and Senate President John Cullerton (D-Chicago) has raised questions about the constitutionality of Madigan's plan. Cullerton met Thursday with public-sector labor unions in hopes of crafting an alternative that could be voted on in coming weeks in the Senate.
"The Senate president intends to take the Madigan plan and the union proposal to a caucus meeting early next week. At that point, we'll able to see where the appetite for action is," Cullerton spokeswoman Rikeesha Phelon said.
Madigan gutted a Senate-passed pension plan written by Cullerton that applied to only one of the state's five retirement systems. Cullerton's plan also adhered to a legal theory he championed that would have retirees decide for themselves whether to give up a compounding, annual 3-percent pension boost or forego state-subsidized health insurance - an approach Cullerton insisted was the only way to reel in pension costs and still be constitutional.
Madigan abandoned both concepts in his plan.
The speaker's measure would wipe out as much as $30 billion of the nearly $100 billion unfunded pension liability the state faces and fully fund the pension systems by 2045.
Madigan's plan takes aim at one the single biggest drivers of the state's pension crisis: the compounding 3-percent annual increases state retirees get. Now, it's an automatic based on whatever annuity a retiree gets and has exceeded the rate of inflation 13 times in the past 20 years.
Madigan has recalculated that cost-of-living increase in a far less generous manner, using a template offered by Senate Minority Leader Christine Radogno (R-Lemont). A retiree would get 3 percent of an amount equal to the number of years they worked for state government, a university or downstate and suburban school district, multiplied by $1,000.
For a retiree who worked 20 years for one of those employers and has a $35,000 annuity, for example, the current formula would give him or her $1,050. Under Madigan's revision, the cost-of-living boost would drop to $600.
"These are steps none of us relish taking, but we know we should. It's also historic because we as a body are sending a very clear message. We're putting necessity above political expediency and doing the right thing over the easy thing," said Rep. Elaine Nekritz (D-Northbrook), Madigan's point person on pensions.
The plan also includes a funding guarantee that would give the state's pension systems new authority to petition the Illinois Supreme Court if the state shorts the pension systems or skip payments, a recurrent practice that also has driven the state's pension systems deeper into the hole.
But not everyone in the chamber was sold on the strength of that pension-funding safeguard, noting that future Legislatures could weaken or suspend it.
"We do not have a real guarantee," said Rep. Michael Fortner (R-West Chicago), who voted against Madigan's legislation. "The fact we can change it through our budget implementation process gives me concern a future Legislature will do very much the same things we've seen happen all too many times during the past decades under a variety of different administrations."
Madigan's plan did not include the pension system that covers the state's judges, including those who sit on the Illinois Supreme Court, which figures to be the ultimate arbiter of any pension plan that gets through the Legislature and signed by Quinn. Judges have the highest average annual annuity of anyone covered by a state pension: $117,564.
The speaker, who Wednesday predicted Supreme Court sign-off on his plan, justified his move to exempt judges from the pension pain during floor debate Thursday.
"Judges were excluded as a practical decision," Madigan explained. "We anticipate this matter will be before the Illinois court system and Illinois Supreme Court, and the absence of the judicial pension system in the bill will relieve them of the burden of dealing with a conflict of interest."
The coalition of public-sector labor unions fighting Madigan's pension package lashed out at the House action.
"Senate Bill 1 is unfair to the active and retired teachers, nurses, police, and other employees who paid out of every paycheck to fund their pensions, even as the state shorted its share. On top of that, it is blatantly unconstitutional and thus saves nothing," said a statement from the We Are One Illinois coalition. "It simply exacerbates Illinois' fiscal problems."
The group is trying to craft an alternative to the Madigan plan with Cullerton, though neither the unions nor Cullerton offered details of what their proposal was. It described a Thursday meeting with Cullerton as "productive."
Despite such criticism of Madigan's plan, a government watchdog that has long pushed for sweeping pension reform in Illinois lauded the components of Madigan's legislation.
"The Civic Federation considers the passage of Senate Bill 1 as amended a monumental step forward by the Illinois General Assembly in beginning to address the state's worst-in-the-nation pension crisis," said Laurence Msall, president of the Civic Federation.
"This legislation has the potential to put the state of Illinois on the path toward financial stability," Msall said.
After the House vote, Madigan predicted the Senate, in the remaining 29 days before the Legislature's scheduled spring adjournment, would vote to send his legislation to Quinn.
"I'm committed to the bill. I'm committed to solving the issue. I've spoken to this publicly that the state's fiscal problems are so bad that they require radical surgery, and this is the first step. We've taken that first step in the House. My expectation is that the Senate will approve this bill," Madigan said.
Asked how he was so confident of that, the longest-serving House speaker in state history and a delegate to the state's 1970 constitutional convention quipped, "Maybe it's that 43 years around this building."