Wednesday, October 17, 2012

Illinois’ amendment near irrelevant, dangerous by Bill Knight

Most voters might be surprised by an extra ballot they get when voting next month – but they’ll be shocked by the conse­quences if it passes.

Proposed Consti­tu­tional Amendment 49 claims to address the state’s pension obligations.

First, given the shortfall of more than $80 billion in Illinois’ five pension plans, voters should ask how Amendment 49 would deal with the money the state owes those pensions.

It does nothing.

Next, voters should ask how Amendment 49 would deal with the benefits promised to states employees or retirees, who accepted work that paid less than the private sector and no Social Security in exchange for a state pension.

It does nothing.

Lastly, voters should ask how Amendment 49 would deal with the future – espe­cially schools, town­ships, commu­nities, counties and Illinois’ other govern­mental units (already coping with state require­ments on the one hand and late state payments on the other).

It does nothing – except hamstring local officials.

Implying that pension costs are driving the state’s debt, Consti­tu­tional Amendment 49 says, “No bill, except a bill for appro­pri­a­tions, that provides a benefit increase under any pension or retirement system of the State, any unit of local government or school district, or any agency or instru­men­tality thereof, shall become law without the concur­rence of three-fifths of the members elected to each house of the General Assembly.”

If 60 percent of voters agree, they’d change the state consti­tution, which currently says, “Membership in any pension or retirement system of the state or any local government or school district, or any agency or instru­men­tality thereof, shall be an enforceable contractual rela­tionship, the benefits of which shall not be dimin­ished or impaired.”

Glen Brown, a Bene­dictine University [instructor] and blogger, asked, “Who writes the laws by which Illinois government operates? The Civic Committee [of the Commercial Club of Chicago] and its legislative power brokers. Who will profit from pension reform and a dimin­ishment of contracts and, thus, free up the state’s cash flow and increase its profit margin in Illinois? The Civic Committee and its minions. Who could even­tually lose their ‘only’ retirement pension? Teachers and other public employees of Illinois.”

But supporters say it would help prevent unfunded future liabil­ities, provide better account­ability, and require greater consensus.

Also on board are editorial-writing friends who argue that since people are living longer, the amendment makes “good financial sense… For too long, lawmakers’ hands have been tied.”

Hardly! For years, the legislature’s hands have been in the till, taking from pensions rather than making required contributions.

The shortfall in the pension systems stems from “the state’s decades-long practice of inten­tionally borrowing revenue from ‘promised’ contri­bu­tions to the retirement systems in order to subsidize the cost of deliv­ering public services,” noted the Center for Tax and Budget Account­ability (CTBA) this summer.

Since 1994, the state contributed its pension share just once (in 2004). Four times (1994, ’95, ’96 and 2006), it paid less than one-third of the mandated amount. The amendment misleads; the problem isn’t pension benefits; it’s state contributions.

The state borrowed the funds and now complains about the lenders. Borrowers – even state government – should have no concern about how lenders use money, whether tithing to church, buying a truck or going to ball­games. Just pay back the loan!

The amendment itself would do nothing to pay back what the state took from pension systems (nor compel Illinois to make required contri­bu­tions). It restricts government employers and employees alike, creates confusion on what’s a “benefit increase,” guar­antees an expensive lawsuit, and makes government service less attractive to good people recruited to work here.

Still, some edito­ri­alists say that since many private employers have killed pensions – presumably, replacing them with casino-style hopes such as 401(k)s, at best – people should accept that and not plan to retire and “count on others to fund their retirement.” What?

Consumers, stock­holders and others fund research, production, marketing, etc.; that’s commerce. And “others” fund roads, schools and police – others who don’t drive every route, have kids in school or are crime victims. That’s civil society.

Also, while 3 out of 5 doesn’t seem like a big deal, demanding 107 out of 177 (36 of 59 Senators and 71 of 118 Repre­sen­ta­tives) rather than half-plus-1 (90) votes would put a minority in control and give local govern­ments’ power to Spring­field – where the problem originated!

The amendment shifts the blame for the legislature’s inability to resist borrowing from pensions and onto the shoulders of the victims of irre­spon­sible lawmakers.

Promised retirement benefits, public workers have paid into their pension plans and planned their lives accordingly.

The solution – paying back to the five pension systems what state government borrowed – needs the General Assembly to nego­tiate with the pension systems and agree to a workable repayment schedule over the next few decades, not elim­i­nating consti­tu­tional rights.

Bill Knight is an award-winning jour­nalist, professor and deputy director of the jour­nalism program at Western Illinois University.

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