In a preview of his budget speech later this month, Gov. Pat Quinn outlined a plan yesterday to reform the pension system and slash $2 billion from the Medicaid program, while saying he wants to close tax loopholes to bring in more cash.
In doing so, Quinn appeared to outright reject some pension ideas offered up by House Republican Leader Tom Cross and Senate President John Cullerton, but he embraced some Medicaid proposals.
The governor said pension reform negotiations are in need of a fresh start. When asked about Leader Cross’ now infamous reform bill, Quinn replied, “I don’t think there’s a lot of enthusiasm by members of either party and either house for that particular bill. We’re going to start from scratch and everybody will have a voice and we’ll get to a good place.” Quinn made his remarks during and after a City Club of Chicago address.
Quinn said he wants “meaningful reform” of the pension system and laid out four “key variables.”
1) Employer contributions – Forcing local school boards and universities to pay their share, which, Quinn said, could be phased in over time. The governor also said that the transfer of responsibility wouldn’t necessarily result in higher local property taxes, which are capped, but could be done via economizing by employers. Senate President Cullerton said much the same thing the other day. All three Democratic leaders have said they favor this concept, so watch for it to move forward.
2) Employee contributions – Senate President John Cullerton’s chief legal counsel has suggested raising employee contributions by 3 percent, which could raise hundreds of millions a year if you include all state, teacher and university employees. With the governor including the item on his list yesterday, the idea appears to be seriously in play.
3) Cost of living adjustments – Some of the talk at the Statehouse has been about possibly setting the annual COLA on the original retirement amount, rather than basing it on the previous year’s amount. This was done for future hires during the last round of pension reforms. The COLAs could also be lowered or eliminated.
4) Retirement age – The retirement age has already been raised for future hires, but Quinn now wants to do that for current public employees.
The governor also appeared to reject Senate President John Cullerton’s idea to adjust the pension “ramp” which ultimately requires a 90 percent funding ratio by 2045. “I think we should look at the ones I mentioned,” Quinn said when asked about the ramp.
Despite Quinn’s claim that he believed any pension reforms would have to be “done in a constitutional manner,” AFSCME pointed out that a legal analysis prepared at the governor’s own behest in 2010 completely rejected the idea that pension benefits could be changed after an employee was hired. “A current State employee has a vested right to have his pension payments calculated in accordance with the law that was in effect when he entered the pension system,” the analysis by Gino DiVito and John Fitzgerald declared.