June 9, 2014
The following opinion piece by Civic Federation President Laurence Msall was published by the Chicago Tribune on June 5, 2014.
State legislators left Springfield last weekend with very little to show for their disappointing efforts this year. Police and fire pension funds are still in danger of insolvency. A pension bill negotiated by Cook County and several of its unions stalled in the House. The legislature failed its most fundamental responsibility: It passed a budget that does not have adequate funding for a full year. Our representatives are still ignoring the urgency of Illinois’ fiscal crisis.
Gov. Pat Quinn has a chance to salvage part of this year’s session by signing Senate Bill 1922 before a Monday deadline. This bill to stabilize Chicago’s municipal and laborers pension funds was negotiated by city leaders, endorsed by several unions and approved by the House and Senate. Both funds are dangerously close to being unable to pay pension and health care benefits for retirees. These two funds, which represent more than half of all city employees, could be insolvent within the next decade. That’s an unthinkable prospect.
This legislation represents a critical step by the City of Chicago to address its worst-in-the-nation pension funding crisis. Even if this bill becomes law, the city will need to deal with more challenging crises facing the police, fire and teachers pension funds. Similar crises are now playing out in communities across the state. In some, the entire property tax levy is consumed by pension funds.
By signing the reforms negotiated by Chicago, the governor can send a strong message that he is prepared to be a partner with local governments in resolving this crisis.
A veto would send an entirely different message. It would tell Illinois businesses, citizens, employees and retirees that our leaders are gridlocked on the most critical issue facing the state. It would create more uncertainty for the state and local governments. It would have a negative impact on our business climate. It would hurt our credit worthiness. Last July, Moody’s Investors Service hit Chicago with an unprecedented triple downgrade in its credit rating, citing the city’s “very large and growing pension liabilities…” Chicago has the lowest credit rating of any major U.S. municipality outside of Detroit. Chicago and other Illinois towns cannot afford further delays.
Leaders in Springfield still seem to be shocked by the reality that stabilizing the pension funds will require additional tax dollars due to decades of state-mandated underfunding. But they have on occasion shown the capacity to act. They passed meaningful pension reform for the state in December.
And they passed a meaningful bill for Chicago. The governor has to sign it.