Structural pension reform for Illinois is overdue

The General Assembly is in the midst of crafting legislation that reflects its most pivotal function – passage of an annual budget. And yet, Democrats, despite their supermajority, already have missed their self-imposed deadline of getting that done by last month.

Lawmakers are reconvening Wednesday to resume work on a proposed spending plan. Democrats, however, are committing the same egregious mistake they’ve been guilty of with past budgets – they’re fashioning a budget behind closed doors, predictably creating a scenario in which GOP lawmakers, as well as all Illinoisans, get virtually no opportunity to peruse and debate the document before it’s rushed through the pipeline to Gov. JB Pritzker’s desk for his signature.

As wrongheaded as all of this is, it’s dwarfed by the Democrats’ biggest judgment gaffe. They’re on course to underfund pensions by $4.4 billion, a terribly irresponsible choice that sends the state’s long-term fiscal outlook in the wrong direction.

Illinois’ pension debt stands at about $140 billion. That’s $10 billion more than where the state’s pension debt stood in 2021. The state’s long-standing pension crisis poses an ever-present threat to Illinois’ long-term financial stability, bottoming out the state’s credit ratings and discouraging prospective employers from bringing jobs to this state. Who would want to invest heavily in a state with such an abysmal financial outlook?

It’s not all doom and gloom under Pritzker’s watch. The governor, along with Comptroller Susana Mendoza, achieved a major milestone by wiping out the state’s stack of unpaid bills and putting Springfield back on a normal payment schedule. That was no small feat. In 2017, the state’s bill backlog had ballooned to $16.7 billion, thanks to a two-year stretch that Illinois endured without a budget under former GOP Gov. Bruce Rauner.

Pritzker also has been smartly building back up the state’s rainy day fund, a sorely needed financial buffer for when unexpected expenses arise. It wasn’t that long ago, 2020 to be exact, that Illinois had $58,655 in its rainy day fund, enough to cover expenses for about 30 seconds. And, we realize that Pritzker has been paying more than the minimum amount required for the state’s annual pension payment. This year, he proposes paying $200 million more that what Illinois statutorily requires for pensions, which is $9.8 billion.

But what’s missing from Pritzker’s financial stewardship is genuine, lasting structural reforms to the state’s precarious pension outlook.

We’ve said it before, but it bears repeating: Illinois needs a pension reform amendment to the state Constitution that would essentially leave current earned benefits untouched, but allow for reductions in future benefit growth to levels that the state could afford. Passage of such an amendment would require a referendum that’s put before voters. If Pritzker is truly committed to putting Illinois’ financial outlook back on track, he should push for that referendum.

Another crucial reform Pritzker should embrace is a simple one, albeit antithetical to how Democrats in Springfield operate: spend only as much as you have. Ongoing budget negotiations exemplify how Democrats have been ignoring that tenet.

Pritzker initially proposed spending $220 million on health care for immigrants 42 or older, who are in the country without legal permission or have green cards but aren’t eligible for Medicaid because they haven’t completed a five-year waiting period. The estimate of what would be needed to be spent has skyrocketed to $1.1 billion. Democrats are squabbling over whether to somehow find a way to wedge that program into the budget.

We agree that the goal is worthwhile, but lawmakers must face the reality that tax receipts sharply dropped in April 2023 compared with April 2022 – plummeting more than $1.8 billion. Simply put, it’s an expenditure not supported by revenue. “Live within your means” continues to be a mantra Springfield deems optional.

Lawmakers have until the end of the month to get a spending plan approved. However, if they can’t reach an agreement by then, the number of votes needed to pass legislation rises to a three-fifths majority. They still have time to get it right, and restore the faith of Illinoisans.

How? By bringing the proposed budget out into the light for meaningful back-and-forth, crafting a document that doesn’t spend money the state lacks and, by beginning serious talk of the kinds of structural reforms Illinois needs to extricate from the pension quagmire that has burdened the state and its citizens and its businesses for far too long.

– Chicago Tribune