House Joint Resolution Constitutional Amendment 49 Will Diminish Public Pensions

By now, most of us know what the “Pension Clause” or Article XIII (General Provisions), Section 5 (Pension and Retirement Rights) of the Illinois Constitution states: “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.”

“[This] Pension Clause serves as a bar against any unilateral legislative or governmental action to reduce or eliminate the pension benefit rights in place when an employee [becomes] a member of the pension system” (Eric Madiar, “Is Welching on Public Pension Promises an Option for Illinois” 21).

Nevertheless, House Speaker Michael Madigan's constitutional amendment (HJRCA 49) will “propose to amend the General Provisions Article of the Illinois Constitution. [This amendment] provides that 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…

“[Furthermore, HJRCA 49] provides that no ordinance, resolution, rule, or other action of the governing body, or an appointee or employee of the governing body, of any unit of local government or school district that provides an emolument increase to an official or employee that has the effect of increasing the amount of the pension or annuity that an official or employee could receive as a member of a pension or retirement system shall be valid without the concurrence of three-fifths of the members of that governing body…

“The term ‘benefit increase’ means a change to any pension or other law that results in a member of a pension or retirement system receiving a new benefit or an enhancement to a benefit including, but not limited to, any changes that (i) increase the amount of the pension or annuity that a member could receive upon retirement, or (ii) reduce or eliminate the eligibility requirements or other terms or conditions a member must meet to receive a pension or annuity upon retirement.

“The term ‘benefit increase’ also means a change to any pension or other law that expands the class of persons who may become a member of any pension or retirement system or who may receive a pension or annuity from a pension or retirement system. An increase in salary or wage level, by itself, shall not constitute a ‘benefit increase’ unless that increase exceeds limitations provided by law… This Constitutional Amendment [will] take effect on January 9, 2013.”

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Of course, this amendment to Article XIII, Section 5 of the Illinois Constitution will be cast on a separate ballot. As stated, this amendment to the 1970 “Pension Clause” will need three-fifths of those voting on the amendment or a majority of those voting in the election in order to pass. However, it is important to note that Illinois citizens have been duped by the Civic Committee of the Commercial Club of Chicago, the Civic Federation, the Illinois Policy Institute, the Chicago Tribune, and other nefarious partners; therefore, this amendment may pass, unless public employees unite to re-educate the public to “Vote No.”

Most public employees understand the cause of the $83 billion unfunded liability to the pension systems: “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” (The Center for Tax and Budget Accountability CTBA, June 2012).

Some public employees and the majority of the public do not realize, however, that “the top two drivers of underfunding were insufficient employer contributions and investment losses during the Great Recession: [that] insufficient employer contributions account for 44 percent of growth in unfunded liabilities, and investment returns account for 22 percent of total growth. In contrast, benefit increases account for less than 10 percent of the growth [in unfunded liability]. Given the small role benefit increases played in creating the problem, it is unfair to target benefits [through HJRCA 49] in order to reduce the existing unfunded liability” (CTBA).

Most public employees and the populace do not comprehend that “the funding plan under Public Act 88-0593 [the 'Ramp Up'] heavily back loaded repayment of the aggregate unfunded liability…; [that] HJRCA 49 does not reduce the state systems’ current $83 billion unfunded liability by even one cent. HJRCA 49 [also] fails to address the real fiscal issue caused by the state’s outsized pension debt—how to amortize the $83 billion debt owed to the five state-sponsored retirement systems in a feasible way.

“Second, implementing a Constitutional amendment that hinders the ability of legislators to institute benefit increases would make it nearly impossible to rectify the problems associated with the reduced benefit tier that lawmakers created in 2010 [by SB 1946] …

“The uncertainty surrounding language used in HJRCA 49 is of extra concern because once passed, changing any aspect of it would require yet another Constitutional amendment. Given that there are nearly 7,000 local governments in Illinois, the impact of the supermajority-voting requirement could be costly in the amount of time legislators will have to spend on pension benefit analysis” (CTBA).

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Most significantly, as stated by the State Universities Annuitants Association (SUAA), HJRCA 49 “would grant unprecedented powers to government that will undermine protections contained in the pension protection clause [Article XIII, Section 5] and eliminate the uniform laws that now exist for [all] state employee benefits and obligations in the Illinois Pension Code” (Letter from SUAA, April 25, 2012).

Will the Constitutional amendment (Section 5.1) to the Pension Clause nullify Article I, Section 16 (Ex Post Facto Laws and Impairing Contracts) of the Illinois Constitution and Article I, Section 10 (Limitations on Power of States) of the U.S. Constitution?

How important is it now for public employees to educate the public about attacks on rights and benefits of middle-class citizens?  Shouldn’t public employees be proactive and enraged by the Civic Committee’s et. al. persuasive attempt to divide the middle class in Illinois through fallacious reasoning and distorted information? Shouldn’t public employees be provoked by their relentless priority on radical “pension reform” and their policymakers’ attempt to breach the contract of public employees while giving tax cuts to corporations and the wealthy, regardless of whether this inequitable “corporate welfare” produces more budget deficits? The Civic Committee (et. al.) has shrewdly and deceptively maintained the dialogue and focus on public pensions instead of needed revenue reform, and not much has been done about it.

This government by the rich and powerful, by groups that duplicitously state it is a “not-for-profit organization whose mission is to stimulate and encourage the growth of the area's economy and its ability to provide for its people,” is based upon the impoverishment of middle-class citizens. The Civic Committee’s and Civic Federation’s power is purchased. Their “current mission” is the wholesale destruction of the entire middle class and the pension systems in Illinois, especially the Teachers’ Retirement System.

Who is behind the vague and ambiguous laws by which Illinois government operates besides House Speaker Madigan? The Civic Committee 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 their ilk. Who could eventually lose their “only” retirement pension? Teachers and other public employees of Illinois.

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There are no equal rights when there is inequity of wealth and when promises are made to underpin and to sustain the fortunes of a few at the expense and victimization of the many. Public employees know they have become victims of deregulation and tax reductions for the wealthy minority, resultant of organized political action by and in support of the wealthy sector.

Public employees know they will become victims of insidious financial “reforms” that do not resolve the state’s deficit problems but will continue to accommodate and reinforce the enormous inequality of organizational resources of these thriving egotistic profiteers among us, unless public employees choose to unite and fight against this injustice.

Public employees know they are victims of a tyranny by the few who lack accountability for destroying a representative democracy and a just economy in Illinois; public employees know they are victims of the corporate “We Mean Business” PAC and vast resources of money and influence committed to reforming the rules and policies that have and will continue to adversely affect the lives of middle-class citizens and the disenfranchised; moreover, most public employees know about the schemes to reallocate the state’s future liabilities to teachers and school districts and universities by way of purchasing policymakers who are attempting to amend and circumvent Article XIII, Section 5 of the Illinois Constitution through House Joint Resolution Constitutional Amendment 49.

There is a simple synergetic balance to understand here. If the state’s policymakers impair the Pension Clause, they will not only destroy the public employees’ financial security and their constitutional rights, but they will also damage the communities that these people support, serve and protect.

A Synopsis of the Proposed Amendment 5.1 to Article XIII of the Illinois Constitution

On the November Ballot, Illinois voters will be asked if they believe the Illinois Constitution should be amended to require a three-fifths majority vote in order to increase a benefit under any public pension or retirement system. Please vote NO on the proposed Constitutional Amendment (HJRCA 49). This Constitutional Amendment would also require that any local collectively bargained agreement be approved by a three-fifths majority if those agreements had incentives or additional compensation increases beyond salary.

Reasons to VOTE NO:

  It is mostly the legislators’ fault that the pension systems were poorly funded throughout the decades. That diverted pension money was used for other state services and legislators’ “pet” projects instead.

  The constitutional amendment will make public employees’ ability to fight for fair contracts much harder (Illinois Education Association, IEA);

  This constitutional amendment will limit the bargaining power of employers and employees (IEA); 

  There is the possibility of disagreement on what constitutes a benefit increase” (Jesse White, Secretary of State). The COLA and other “earned” benefits will most likely be reinterpreted in this regard;

  This constitutional amendment would make it nearly impossible to remedy the Social Security issues with the passage of Senate Bill 1946 in April, 2010 (IEA). This is unfair to any new teachers hired after January 1, 2011;

  This constitutional amendment will make it harder to attract the best possible college candidates for the teaching profession (IEA);

  This constitutional amendment “does not reduce the state’s pension systems’ current $83 billion unfunded liability” (caused primarily by the state’s legislators); “it fails to address the real fiscal issue caused by the state’s outsized pension debt—how to amortize the $83 billion debt owed to the pension systems” (Center for Tax and Budget Accountability);

  Most significantly, as stated by the State Universities Annuitants Association (SUAA), this constitutional amendment “would grant unprecedented powers to government that will undermine protections contained in the pension protection clause [Article XIII, Section 5] and eliminate the uniform laws that now exist for [all] state employee benefits and obligations in the Illinois Pension Code” (Letter from SUAA, April 25, 2012);

  Note: if you do not vote at all, your absent vote will make it easier for a majority “Yes” vote.

The question on the November ballot will ask, “…If you believe the Illinois Constitution should not be amended to require a three-fifths majority vote in order to increase a benefit under any public pension or retirement system, you should vote NO… on the question. Three-fifths of those voting on the question or a majority of those voting in the election must vote “Yes” in order for the amendment to become effective on January 9, 2013.” Please join us in voting NO against the proposed constitutional amendment on the November ballot.  

-Glen Brown

[HJRCA 49] "Emolument Increase…" May 27, 2012 by John Dillon

In historical law, the term “emolument” is connected to Article I, Section 6, Clause 2, of the United States Constitution and is most often referred to as the “Ineligibility Clause.” To oversimplify, the clause prohibits members of one branch of government (Executive) from serving in another (Legislative). For example, when Hillary Clinton accepted her current position as Secretary of State, she was forced to receive a pay cut of nearly $5000 for her new appointment because the office had experienced an increase in wages since Mrs. Clinton had been in the Congress. In other words, Mrs. Clinton might have been instrumental in increasing the pay for Secretary of State and then sought the office for monetary gain (Huffington Post).

In theory, the clause prevents a member of Congress (or other political office) from setting a new and higher level of compensation and then securing that position for gain. The framers spent considerable time reconsidering and revising to get the clause correct, and even today it remains an ambiguous point of contention in determining the fairness of enhancements. Who would reach back into the early 1600’s to unearth such a concept? What kind of legal, labyrinthine mind might find an advantage with such an idea?

Enter Speaker Madigan, stage right.

In May of 2012, both houses of the Illinois General Assembly, under the orchestration of Speaker Madigan and Senate President John Cullerton, passed a proposed Constitutional Amendment (HJRCA 49), which will be placed on the ballot for the general election in November of 2012. The amendment is designed, according to Mr. Madigan, to prevent “pension sweeteners” without a three fifths (60%) approval of both houses. When asked, Speaker Madigan explained, “It [HJRCA 49] is intended to be tough medicine because review the actions of the Legislature and governors over the last several years…The record would say we need this medicine” (www.foxillinois.com/internal?st=print&id=147900555&path=/news/illinois).

Of course, Speaker Madigan has been present and presiding for more-than-the-last several years as pension obligations went unfunded by the legislature. When one does enter stage right, good theatre demands an attractive protagonist, and Speaker Madigan has certainly cast himself as a man of action for the general public; however, some suspect that Madigan is once again “the master politician (creating) the appearance that he is doing something about pensions” (Sauk Valley, "Speaker Hopes His Amendment Fools the Voters"). Governor Quinn may believe himself “put on earth to solve this pension problem,” but our Speaker is, indeed, the deus ex machina.

HJRCA 49 is an attempt to demonstrate Madigan’s own purpose and resolve in the continuing problem of the state’s consistent pension underfunding… Remember, after all, Madigan controls the House Rules Committee “with an iron hand” from which any pension increase bill must survive even to be considered (Sauk Valley), so the amendment to stop pension sweeteners is most unnecessary, but it looks so very, very proactive.

On the other hand, the proposed amendment may certainly prove very injurious to one smaller section of the captive audience: those younger professionals entering the field of teaching in Illinois after January of 2011. The planned amendment does herald continued fiscal pain for those tied to the Tier Two rack of paying 9.4% of their salary for their own pensions, far above the 6% that reflects the true return on their eventual pensions.

Recall also that Tier Two teachers’ increased contributions are paying down the state’s earlier unfunded liability for payments not made since 1953. Should Illinois voters approve Madigan’s amendment in November, the likelihood of the General Assembly ever reducing its unfair, inequitable, and punitive payment for Tier Two pension contributions is not promising.

In a recent communication from Region 28, Addison Woodward warns that the abstruse wording of the amendment should raise alarm because “anything other than a salary or wage increase that could increase a pension or annuity would need a 60% vote supporting the increase from the governing body and/or both chambers of the General Assembly.”

Indeed, vague and ambiguous wording within the proposed amendment is unsettling and likely to create an opportunity for an eager lawmaker to suggest that COLA’s fall outside the usual range of salary and wage benefits and are also to be considered emoluments requiring the 60% approval from both houses of the General Assembly (Woodward).

Several additional sections in the proposed amendment are quite disconcerting as a result of unclear and formless wording. “For purposes of this subsection, the term ‘emolument increase’ means the creation of a new or enhancement of an existing advantage, profit or gain that an official or employee receives by virtue of holding office or employment, including, but not limited to, compensated time off, bonuses, incentives, or other forms of compensation” (HJRCA 49).

Is the COLA a new enhancement? That depends on how a lawyer may wish to see it. It is certainly not new if one considers the three percent cost of living as part of a continuing package that is an accrued benefit given to retirees when they end their careers. On the other hand, if each yearly-compounded cost of living is considered a new enhancement, it will require a 60% approval of both houses of the General Assembly for currently retired teachers to receive that COLA. How will the courts perceive this argument? Hard to say? But rest assured they will have their say...

And if the amendment does pass – and with phrases like stopping pension sweeteners, why wouldn’t it? – What might also be up for a new interpretation? As Woodward warns again, the totality of Article XIII, Section 5 could be at stake. “Nothing in this section shall prevent the passage or adoption of any law, ordinance, resolution, rule, policy or practice that further restricts the ability to provide a 'benefit increase,' 'emolument increase,' or 'beneficial determination' as those terms are used under this section.  It is this clause that many believe will be used to neutralize the pension protection clause” (See Woodward, previous post).

In order to be approved, the amendment must receive a three-fifths approval by those voting on the proposed amendment in November or by a majority of those voting in the election. Some voters choose not to vote on amendments at all, while others choose to vote only on them; thus, the need for a fractional difference as per the Illinois Constitution (see Article XIV, Section 4). In sum, the amendment can be passed either of two ways, so it is imperative we educate our citizenry as to the inequities of the amendment. Vote NO on HJRCA 49.

from https://sites.google.com/site/pensioneducationsite/

HJRCA 49: What it means and why you should be concerned by Addison Woodward May 9, 2012

HJRCA means House Joint Resolution Constitution Amendment, and HJRCA 49 sailed through the House and the Senate. Only two no votes were cast and that was in the Senate. HJRCA 49 was introduced by Speaker Madigan with the support of the Senate President.

The amendment introduces the term “emolument increase.” That term refers to the “creation of a new or enhancement of an existing advantage, profit or gain that an official or employee receives by virtue of holding office or employment including, but not limited to, compensated time off, bonuses, incentives, or other forms of compensation.” In its simplest terms, it means for any increase in an annuity or pension a super majority vote of the House and Senate (60%) is needed. 

Further, it requires a three-fifths vote of any governing board of any unit of local government or school district or any agency for a beneficial determination. In short, anything other than a salary or wage increase that could increase a pension or annuity would need a 60% vote supporting the increase from the governing body and/or both chambers of the General Assembly.

Why should you be concerned?  Most immediately the COLA could be considered an increase in your pension. I am sure one or more lawmakers might make the argument that since the COLA increases your pension that ‘granting” a COLA for a particular year would require a 60% vote in support of such action.

Any change to some of the worst provisions of the new pension law impacting recently hired employees would need a 60% vote in favor of relaxed provisions of that bill. That is what is meant by “beneficial determination.” Remember new employees must work until age 67 or be penalized 6% a year for retiring before that. The COLA is also reduced and does not compound, and there is a cap on pensions of $106,800.

Finally, there is this to consider: “Nothing in this section shall prevent the passage or adoption of any law, ordinance, resolution, rule, policy, or practice that further restricts the ability to provide a 'benefit increase,' 'emolument increase' or 'beneficial determination' as those terms are used under this section." It is this provision that many believe will be used to neutralize the pension protection clause. Actually this clause may supersede the pension protection clause since it is an amendment.

Do you get the picture? Benefits that retirees currently enjoy and benefits that current employees are looking forward to enjoy are in extreme jeopardy. Furthermore, the pension provisions that impact new employees in deleterious ways will be much more difficult to change, as will any new pension changes that occur between now and January 9, 2013, if this amendment is supported by the voters this fall.

It is incumbent upon you and your family, friends and any public employee you know to vote NO on this amendment on November 6^th.  VOTE NO ON HJRCA 49!

HJRCA 49, a Letter from the State Universities Annuitants Association on April 25, 2012

To Chairperson Senator Don Harmon Senate Executive Committee

Dear Senator Harmon:

Vote ‘No’ on HJRCA 49

Amending the Constitution of the State of Illinois is more about how it affects the next generation rather than the present. HJRCA 49 would be a very complex addition to our Constitution and should be subject to more objective analysis and a thorough legal review than in the time we have here today.

As I read it, this amendment affects all local governments and government services, including police and fire departments, education and more. It will affect government at every level for a very long time.

The State Universities Annuitants Association represents currently employed and retirees of the State University and Community College systems. Our members [and TRS members] do not receive social security. We believe this amendment to our Constitution will make it more difficult to attract and retain quality personnel at Illinois State-funded universities and colleges [and public schools throughout Illinois] by placing conditions and strict procedural requirements on pension and retirement benefit increases.

We also understand that the governing body for higher education in this State is the General Assembly. These requirements seem to put or would require the General Assembly to be in the business of setting salaries for those such as physics professors, grounds-keepers, plumbers and talented administrators employed in higher education [and in the public school systems throughout the state]. We believe this is the domain of the education sector.

This amendment also creates new definitions for the terms “new benefit,” “emolument increase” and “beneficial determination” which are neither defined in current statutes or in existing case law. These definitions, and other terms in this amendment, would likely generate a litigation that would result in delays and costs that will be borne by local governments, the State, our university system and other stakeholders [such as TRS].

Litigation is inevitable when units of local government try to interpret the 3/5 procedural requirement in this amendment. The problems with this section were manifested in the House last week, when Speaker Madigan's own attorney, Heather Weir, was asked a hypothetical by Representative Elaine Nekritz on how this provision would affect collective bargaining. We have provided this committee a partial transcript of that question:

Chairwoman Nekritz: “I was curious about your argument on the collective bargaining. I didn't quite understand how this constitutional amendment would affect, the you know, if someone is offered an incentive to go get a master's degree how this would impact that?”

Counsel for the Illinois Speaker of the House: “I couldn't tell you without looking at the actual agreement. It would depend on how it was characterized and whether or not that particular, if it's a type of 'perk', that is counted toward the person's final average salary, that would result in an increase in their pension benefits, then I would say 'Yes' it would trigger the 3/5 requirement.”

This committee [IEA and IFT] should strongly reject that kind of broad interpretation, of whether attenuated benefits, like a reasonable incentive for a person to obtain a Master's Degree, contained in a collective bargaining agreement that lead to an increase in a member's salary and, consequently, may result in higher pension benefit, triggers a supermajority vote. We ask you in the coming floor debate on HJRCA 49 to object to this sort of legal analysis.

Finally in section (d) of this amendment, the concluding paragraph would GRANT UNPRECEDENTED POWERS TO GOVERNMENT THAT WILL UNDERMINE PROTECTIONS CONTAINED IN THE PENSION PROTECTION CLAUSE [ARTICLE XIII, SECTION 5] AND ELIMINATE THE UNIFORM LAWS THAT NOW EXIST FOR [ALL] STATE EMPLOYEE BENEFITS AND OBLIGATIONS IN THE ILLINOIS PENSION CODE.

This paragraph will allow every unit of local government to go its own way with respect to pensions, therefore ensuring a benefit gulf will emerge between the State’s retirement systems, geographic regions and citizens employed in a wide range of public sector occupations.

Again, we respectfully ask you vote no on HJRCA 49.

Linda Brookhart, Executive Director for the State Universities Annuitants Association; John Carr, Attorney for the State Universities Annuitants Association; Richard Lockhart representing the State Universities Annuitants Association

cc: Members of the Senate Executive Committee

from

http://www.suaa.org/assets/pdf/TestimonyHJRCA49Senate.pdf?PHPSESSID=4e5cb9f3370881edeca4fe46b422fc98

HJRCA49 passed the House 113-0 on April 18, 2012; HJRCA passed the Senate 51-2 on May 3, 2012. The proposed amendment will be on the November 6, 2012 general election ballot.

“HJRCA 49: A Constitutional Amendment Regarding the Rules Governing Pension Benefit Increases”

“...[According to the Center for Tax and Budget Accountability June 5, 2012], House-Joint Resolution Constitutional Amendment (HJRCA) 49 is a key example of [a] misguided approach to dealing with the state’s unfunded liability. This legislation would add Section 5.1 to Article XIII of the Illinois Constitution, which covers all public employee retirement systems (state and local) in Illinois.

“HJRCA 49 would create a constitutional requirement that any pension benefit increases would require three-fifths (3/5) approval by both houses of the General Assembly. This would make it far more difficult for the legislature to enhance retirement benefits for public workers in Illinois. HJRCA 49—itself a Constitutional amendment also requiring a 3/5 vote— passed the House by the required majority on April 18, 2012, and the Senate on May 3, 2012. That means HJRCA 49 will go to the public in November 2012 as a separate ballot initiative.

“Advocates justify their support for HJRCA 49 by claiming the proposed amendment represents a positive step towards ensuring the fiscal health of Illinois’ public retirement systems. However, this rationale is misguided for two key reasons. First and foremost, while the amendment may prevent future legislatures from passing benefit enhancements without the accompanying and necessary funding, HJRCA 49 does not reduce the state systems’ current $83 billion unfunded liability by even one cent.

“HJRCA 49 fails to address the real fiscal issue caused by the state’s outsized pension debt—how to amortize the $83 billion debt owed to the five state-sponsored retirement systems in a feasible way. Second, implementing a Constitutional amendment that hinders the ability of legislators to institute benefit increases would make it nearly impossible to rectify the problems associated with the reduced benefit tier that lawmakers created in 2010—Section IV details deficiencies of the second benefit tier…

“…Ensuring the stability of Illinois’ public retirement systems is certainly a laudable goal. That said, the means of ensuring stability should be designed to both redress the true causes of the fiscal problem and constitute sound public policy. HJRCA 49 fails on both counts. Since HJRCA 49 only deals with restricting the ability to institute benefit increases, the legislation does nothing to guarantee that public pension systems are adequately funded, thereby entirely missing the core problem that created the state systems’ aggregate unfunded liability. It would also interfere with the legislature’s ability to remedy the flaws with Tier II, making it poor public policy. Adequate funding of the state retirement systems is a pressing issue in Illinois.

“Rather than passing symbolic Constitutional amendments that fail to address the actual cause of the retirement systems’ underfunding, lawmakers should concentrate their efforts on redesigning the currently back loaded and unattainable repayment schedule for the debt owed to the five state-sponsored retirement systems.”

 For the complete Issue Brief from the Center for Tax and Budget Accountability, please read

http://www.ilretirementsecurity.org/admin/reports/files/Issue-Brief-June-2012_-HJRCA0049.pdf

“Duress” and a Reminder about the Most Important Issue

Perhaps one of the most significant statements made in Springfield last week was by John Stevens, Legal Consultant for the “We Are One” Labor Coalition: “To take away the Cost-of-Living Adjustment [COLA] for [current and future] retirees is not a free and fair choice. It is a coercive choice under duress.”  

I wrote recently about the concept of duress (or coercion) as a vitiating (legally defective) factor. Legislators of the State of Illinois are breaching a contract by forcing public employees to make a choice to diminish their originally-vested and paid-for guarantee. Legislators are breaking an enforceable promise, one that is bilateral and emphasizes an agreement between the State of Illinois and its public employees as to their future rights and benefits. 

Regarding the diminishment of the COLA, SB 1673 offers public employees no ethical and lawful alternatives except to consent to the General Assembly’s demands by choosing between two illicit choices; second, this is unlawful because of the illegitimacy of the General Assembly’s advantageous attempt to renegotiate a constitutionally-guaranteed contract; third, it is unlawful to induce undue pressure upon public employees to make an unfair choice; fourth, this is an unjust financial enhancement for the General Assembly because it is a breach of contract for public employees to receive less than what the original vested right and benefit  guaranteed, and it is also a blatant exploitation of influence to obtain an unwarranted advantage. 

“The notion that, whenever a privilege or benefit might be withheld altogether, it may be withheld on whatever conditions government chooses to impose, has been repeatedly repudiated since the mid-20^th century… Unconstitutional conditions – those that make enjoyment of a benefit contingent on sacrifice of an independent constitutional right – are invalid…” (Lawrence H. Tribe, American Constitutional Law).  

There are practical alternatives that will enable the state to uphold its contract with public employees, and they are also constitutional. Have we already forgotten what these practical alternatives are and what the General Assembly can do instead of misappropriation? Here is a recap:

·         According to the National Association of State Retirement Administrators, policymakers must “keep in mind that state and local pensions accumulate and pay out assets over decades. They have an extended investment horizon.”  Therefore, the focus should be on structural tax reform and not pension reform; 

·         There needs to be a modernization of state and local budgets and their revenue systems. “The structural problems that have built up over time in these systems need to be addressed” (The Center on Budget and Policy Priorities);  

·         “At the core of the budget crisis facing [Illinois] is [its] regressive state tax structure… that is, low-and-middle-income families pay a greater share of their income in taxes than the wealthy…  [A regressive tax] disproportionately impacts low-income people because, unlike the wealthy, [low-income people] are forced to spend a majority of their income purchasing basic needs that are subject to sales taxes” (United for a Fair Economy);

·         “Since the rich are able to save a much larger share of their incomes than middle-income families – and since the poor [can] rarely save at all – the taxes are inherently regressive” (The Institute on Taxation and Economic Policy, ITEP). Illinois income tax uses a single-rate structure that results in low-income wage earners paying more taxes than the wealthy. Note Illinois is among 10 states in the nation with the highest taxes paid by its poorest citizens at 13 percent (ITEP);

What Should Be Done Instead of Pension Reform?

·         Tax services. Illinois is one of five states with sales taxes on fewer than 20 services (The Center on Budget and Policy Priorities);

·         Establish a financial transaction tax or “Robin Hood Tax”: a .50 cent tax on every $100 of transacting. “We used to have a financial transaction tax in this country from 1914 to 1966” (Bill Moyers); 

·         “Broaden the sales tax base to include selected consumer services for an estimated new revenue of $550 million a year” (Illinois Education Association, IEA); 

·         Increase taxation on the wealthy: Illinois is in the top 10 of regressive state tax systems where the wealthiest taxpayers do not pay as much of their incomes in taxes as the poorest and middle-income wage earners (The Institute on Taxation and Economic Policy);

·         Close tax loopholes for corporations, especially oil companies and their offshore drilling “for an estimated new revenue of $75 million a year” (IEA); 

·         Eliminate the tax loophole for “Tax Increment Financing Districts” and save “$1.2 billion a year” (Greg Leroy from a national policy resource center for corporate and government accountability in Washington, DC, GoodJobsFirst.org);

·         Eliminate “Edge Tax Credits” for large corporations and save “$347 million a year”; eliminate “Accelerated Depreciation” or “write offs” of all assets and save “$333 million a year” (Leroy);

·         Eliminate “Single Sales Factor” that “allows large corporations to cut their taxes 80-90% and save “$96-217 million a year”; eliminate “Vendor Discounts” that allow companies “to keep an uncapped part of their state taxes as a ‘processing’ fee” and save “$126 million a year” (Leroy);

·         Reinstitute “fund sweeps”: surplus revenue should be added to the General Revenue Fund “for an estimated new revenue of $300 million a year” (IEA); 

·         Add “exceeded revenue” from the Road Fund (motor vehicle and driver’s license fees) to the General Revenue Fund “for an estimated new revenue of $250 million a year”; reduce aggregate transfers/eliminate “some statutory transfers” from the General Revenue Fund “for an estimated new revenue of $200 million a year” (IEA);

·         Eliminate or cap the “retailers’ discount” that businesses keep: 1.75% of sales taxes paid for by the rest of us “for an estimated new revenue of $100 million a year” (IEA); 

·         Implement a more timely system of payments (cash management practices are greatly affected by budgetary practices in relation to deferred liabilities which place additional pressures particularly in the first and second quarters of the year to pay those expenses; timing of tax payments also affects the state's cash flow and should be adjusted accordingly); 

·         Examine and improve the efficiency of the state’s government; 

·         Finally, with a constitutional amendment, “given an appropriately designed graduated-rate structure, Illinois could cut the overall state income tax burden for 94 percent of all taxpayers—on average providing a tax cut to every taxpayer with less than $150,000 in base income annually, raise at least $2.4 billion more in revenue, and keep the effective individual income tax rate for millionaires well below five percent…  Illinois taxpayers with the bottom 94 percent of base income collectively would receive an annual tax cut of $1.06 billion… [T]he combined effect of this policy would be a stimulus to the economy from tax cuts and additional state spending (assuming that the additional revenue is used to fund current public services that would otherwise not be funded) that would create at least 36,000 private sector jobs in communities across Illinois…” (The Center for Tax and Budget Accountability).

We cannot forget that Illinois legislators have diverted nearly $15 billion from the Teachers' Retirement System over the past decades. General Assemblies have created the pension systems’ unfunded liabilities and, as a result, the State of Illinois has a serious REVENUE PROBLEM at present that must be resolved.

For further reading: “Understanding Illinois’ Budget Deficit and Solutions” (March 2) http://teacherpoetmusicianglenbrown.blogspot.com/2012/03/solutions-for-illinois-budget-deficit.html

“Illinois Pension Reform, Senate Bill 1673, Is Without Legal and Moral Justification” (May 29) http://teacherpoetmusicianglenbrown.blogspot.com/2012/05/sb-1673-is-without-legal-and-moral.html

Epitaph for a Transsexual

 (for John-David)

He liked feminine things

as far back as I can remember:
high-heel shoes, scarves, purses,

dancing before mirrors.
School was a horror.
He preferred hopscotch to relay races,

jump rope to baseball.

I imagine a woman in search of her body,
a hijacked plane touched down

in a strange place,

or a photograph of someone else
in unfamiliar clothes.

He played out his life in a foreign film

with no subtitles, with no critics
to rave in reviews, no one

to laud his impersonation.

He was less reality than dream,
more imagination than possibility,

and he lived a life without a plot

and point of view,
like a poorly written story

filled with questions and no answers.

I think of a woman I did not know,
of a sister I wish I had.

(John-David was born on April 28, 1961; he died from complications caused by AIDS on June 3, 1987).

“Epitaph for a Transsexual” was originally published in Willow Review, 1993.