Quinn holds summit for pension reform

June 6, 2012 (CHICAGO)

They left the meeting without reaching any agreement, and the need for pension reform is now political and economic time bomb for the state.

After ending the regular legislative session last week without passing pension reform, the pressure is mounting on the state's elected leaders. Wall Street has threatened to downgrade the state's bond rating again if it does not come up with a plan to resolve what reportedly is the largest unfunded pension obligation of any state in the country.

"This issue cannot be delayed," said Governor Pat Quinn. "It can't be a partial solution."

The governor convened the mid-morning meeting so the legislative leaders of both parties could put their pension reform cards on the table.

The most powerful among them, House Speaker Michael Madigan, made his position clear.

"My position on pension reform is that we have to eliminate the free lunch for local school districts," he said. "The community colleges have already agreed to do it and that's how we should move forward."

In Illinois, only Chicago taxpayers foot the bill for public school teacher pensions. Suburban and downstate districts, community college and university systems depend on the state to fund the public share of their teachers' retirement benefits.

Madigan's vision for reform is to make those districts and systems fund their own retirees' benefits in the future.

"If you wish to provide for reform of the pension system, if you want to have responsibility in developing pensions, then you have to provide for the people who spend the money actually pay the bill," he said.

But Republican leaders fear a so-called "cost shift" will mean local property tax increases in affected areas to pay the added expense of teacher pensions.

"There's more votes if you don't do the shift because people are very concerned about a property tax increase as they should be," Sen. Christine Radagno said.

Weeks ago, the governor downplayed the cost shift as part of his strategy to eliminate the state's $83 billion pension shortfall. Now he says the change is inevitable.

"How you implement that is the nub of the debate right now," Quinn said.

Meanwhile, the house republican leader suspects democrat Madigan is pushing the cost shift as a poison pill of sorts to kill pension reform that is be opposed by Madigan's political friends in organized labor.

"I think the will to do comprehensive pension reform is questionable on the speaker's part," Rep. Tom Cross said. "That's why you saw this putting it in at the last minute and I think that's a shame."

Republican Cross and the other leaders have another meeting scheduled with the governor in two weeks.

In the meantime, the budget office will crunch numbers on how much more those suburban and downstate will have to pay as part of the cost shift.

The governor said the cost shift could be phased in over several years so it does not cause dramatic property tax increases in the suburbs and downstate.

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