On May 29, the video of Representative Michael Bost's rant against Speaker Madigan went viral. His 99-second tirade captured for the whole world the frustration of being an Illinois legislator trying to enact pension reform in an environment of deepening fiscal deficits and competing visions of "fair" pension reform.
A Chicago Sun Times reporter speculated that the rant—complete with the pension bill pages being tossed into the air along with bold biblical statements like "let my people go"—was scripted. He was missing the point. It's true that some seemingly spontaneous oratations of outrage in committee hearings or floor debate are plotted out in advance. The outbursts are tools to intimidate the other side or to derail the discussion. Or the speeches may be used to provide cover for a legislator who knows he or she will be voting contrary to what he or she believes their constituents want. This is part of the game.
The question is not whether Rep. Bost is a great actor but rather why the House Republicans, who had focused on reforming the public employee pension systems all session, chose this moment to bolt? Minus a last minute addition, the bill under debate seemed to have the support of both Democrats and Republicans. The last minute addition legislated a gradual shifting of future employer contributions from the state to the local school districts. This was abandoned later on in the day. But it did not secure the path for pension bill, probably because there were other tricky issues of fairness.
Across the country, voters in towns, counties, and states are feeling the same frustration of increasing debt, no local appetite for tax increases, and expanding pension costs. In Illinois, the pension system was crafted over time; compromise by compromise. This led to interesting decisions that elected officials are now revisiting.
Sometime deep in the past, the school pension system was set up in such a way that Chicago paid its employer contributions but the other districts did not. This does not seem equitable to most Chicago residents, including the Mayor.
But changing the tax structure mid-stream feels unfair to the local school districts. The Chicago Tribune chronicled some generous pension packages for suburban school administrators and teachers agreed to by local school boards who understood that the state would pick up the costs. They probably would not have made this decision if they knew their communities would be paying the pension costs. Many legislators have deep ties to the local school boards and communities who will have to cough up new dollars if pension costs shift to them.
One objection frequently raised is that some changes to public employee pensions may also be unconstitutional. Public sector employees, who pay 4.5% to 9.4% of their salaries into the pension funds, feel that they have legal protections. Remember that these employees gave up Social Security—78% of Illinois state and local government workers do not participate in Social Security—to participate in the state pension programs. They feel that the blame for the rising pension costs rests with those who decided to skip pension payments: Democrat and Republican legislators and Democrat and Republican Governors. Why should public sector employees be the fall-guys for the failure of previous legislators and Governors to manage the budget? Legislators know that teachers and other government workers live and vote in their districts. Why upset them?
And then there are the personal interests of the legislators. "Legislators have crafted retirement perks that are even more generous than those of their government employees." wrote Steve Malanga in the Wall Street Journal on June 9, 2012. "For reformers to tackle this issue, lawmakers have to overcome one crucial special interest: themselves."
So, why do anything? Paying the costs of pensions without significant increases in tax revenue means that there is less money, a lot less money, to invest in education, human services, and other priorities. The nonpartisan Illinois Commission on Government Forecasting and Accountability, stated in their March, 2012 report that the unfunded liabilities of the combined state pension fund increased from 35.1 billion in 2001 to 83.1 billion in 2011. Just recently a major bond agency threatened to lower Illinois' credit rating if they fail to deal with the fiscal deficit created by the pension plan.
Rep. Bost expressed the frustration of many.
Here is what to watch: Will the solution be similar to our neighboring state where it appears that the unions feel they lost and everyone else feels they won because the costs of supporting public employees went down? Or will the solution involve some sharing of the pain so that all stakeholders will complain but it will look fair? Or will it be status quo with no reform and a deepening fiscal budget hole which threatens the Illinois economy?