Posted Online: March 25, 2013, 8:05 pm
Chamber sees progress on Illinois pension crisis
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By Jonathan Turner, email@example.com
In its annual lobbying trip to Springfield last week, the Quad Cities Chamber of Commerce again argued for certainty, stability and predictability.
Photo: Jonathan Turner|
Scott VanDeWoestyne, director of government affairs for the Quad Cities Chamber of Commerce.
The 40-member delegation of business and community leaders shared a unified message to help boost the local economy and is pleased Illinois seems to be making progress on solving its longtime pension funding crisis, said Scott VanDeWoestyne, the chamber's director of government affairs.
"They've got to reform it; we know it's not going to be easy," he said of $97 billion in unfunded pension liability and more than $9 billion in other unpaid bills. State pension obligations are projected to grow by $900 million in the budget year beginning July 1.
That would account for about one in every five dollars from the general fund, meaning less money for schools, health care and public safety, according to Gov. Pat Quinn.
"You'retaking a huge chunk right off the top and forced to make tough choices when it comes to education, public safety, health care, and you can't fund other projects," Mr. VanDeWoestyne said, adding that compromise must be reached to reduce pension payments in the future.
"We're seeing some traction, some good things beginning to happen," he said of the pension crisis. "The retirement age is being looked at, capping salary levels."
The Illinois Senate rejected a comprehensive pension overhaul last week but narrowly approved a scaled-back plan for teachers.
The bill addressing the Teachers' Retirement System, sponsored by Senate president John Cullerton, is estimated to save up to $40 billion during the next three decades. It offers employees a choice on whether they want retirement health care or reduced annual cost-of-living increases, among other things.
Compromises from employee unions are essential to address the financial challenges, Mr. VanDeWoestyne said. "Employees, teachers made their (pension) payments; it's the state that didn't. It's not fair to the teachers or police or firefighters, but you can't just dig in your heels and do nothing."
Failure to fix the pension system has led to downgrades in the state's credit rating.Illinois postponed a $500 million offer of general-obligation bonds planned for Jan. 30, citing unfavorable market conditions after Standard & Poor's cut its credit rating to A-, six levels below AAA. The move left Illinois with the lowest grade of all 50 states.
At the same time, the 2011 increase in corporate and personal income taxes that brought in about $15 billion over the past two years (much that went to pay pensions) is set to expire at the end of 2014. The Q-C chamber is arguing that this sunset must be maintained.
"If every session, there's talk of a need to increase rates or reduce, that's not helping the certainty factor for businesses," Mr. VanDeWoestyne said. "We need certainty coming out of Springfield -- so businesses know how much they can invest. They may say I'm not going to hire that person right now, until I know what the state's going to do."
The chamber had good meetings with the Department of Transportation secretary, with engineering for a new I-74 bridge finishing this year and possible construction starting in 2014, and passenger rail service from Chicago to the Q-C starting in 2015, he said.
The trips to Springfield, Washington, D.C. and the Iowa capitol in Des Moines, offer the Quad-Cities a chance "to share their unified vision, unified voice for growth, increasing prosperity of our region," Mr. VanDeWoestyne said.
Unlike Illinois' red ink, Iowa has a budget surplus of about $800 million and the chamber discussed with its leaders how to make the Hawkeye State more competitive.
"Iowa has challenges, too," Mr. VanDeWoestyne said. "We're advocating for balanced growth, to rise up on both sides of the river in unison. We're seeing that; there's been good parity in Iowa and Illinois. Both states have their pros and their cons."