October 29, 2025
The following is testimony delivered by Civic Federation President Joe Ferguson to the Executive Committee of the Illinois House of Representatives on October 29, 2025. The original testimony has been edited slightly for publication.
It is not an exaggeration to say that passage of Senate Bill 1937, House Amendment 2, would be catastrophic to Illinois' finances, as well as to local governments across the State. While we understand the need for Illinois employees to have reasonable retirement benefits and that Illinois needs to comply with Social Security Safe Harbor regulations, this is not the way to address these issues. The benefits proposed here vastly exceed what is needed to address Safe Harbor. The simple fact is that Illinois cannot afford the benefits laid out in SB1937.
This legislation runs counter to everything the State has been building towards to put Illinois back on a path to financial stability. It would completely reverse the savings that have been made from the institution of the Tier 2 benefit system in 2011, which was put in place to control growth in Illinois’ runaway unfunded liabilities. Worse, it would saddle Illinois taxpayers with the need to provide billions of dollars to pay off an additional estimated $80 billion in unfunded liabilities, all but guaranteeing substantial state and local tax increases to pay for the pension benefits. It puts an unfunded mandate on local governments who would have no way to pay for increased pension liabilities, making it harder for them to fund general operations and all but ensure a stealth property tax on localities across the state. And it would open the door to credit rating downgrades at a time when the State has been rebuilding its credit from near junk status.
The process for vetting this legislation and understanding its fiscal impacts has been woefully inadequate to date. As is the unfortunate way of doing business in Springfield, the bill surfaced at the end of the spring session with little public discussion or debate. The same pattern happens time and again—most recently in the Chicago police and fire pension funds Tier 2 sweetener that passed in the waning hours of the spring session. Lawmakers passed the bill with no public debate, no cost analysis and no identified funding source to support new pension liabilities of $11 billion. Now, here we are in veto session with a truncated timeframe with no further understanding of the impact of SB1937, especially on the local pension funds. The bill is not ready to be voted out of committee.
It would be especially irresponsible to move this bill forward at a time when Illinois is projecting a negative economic outlook and federal policy changes made by Congress in H.R. 1 will have serious financial implications for Illinois. The fiscal and economic policy report put out by the Governor’s Office earlier this month projects that the State will need to close a $2.2 billion dollar deficit in the 2027 fiscal year as a result of federal tax code and policy actions. With only half a month of rainy day reserves, the State has literally no financial cushion to fall back on. The outlook is already bleak. Passing a bill of this magnitude would not just exacerbate, but decimate, Illinois’ finances at a time when we are already in a fragile state, and would be the most irresponsible action the Illinois legislature could take. Passage would also threaten to tip units of local government into functional insolvency, where some localities are already poised.
We acknowledge that action still needs to be taken to address Tier 2 pensions, but the work still has not been done to understand when our pension plans fall out of compliance with Safe Harbor regulations and what the most direct and least costly method of addressing the issue is.
The Civic Federation urges you to not move this legislation forward and instead focus on solutions that address Tier 2 compliance with Safe Harbor in a responsible way that does not backtrack on years of progress.