Wednesday, December 26, 2012

What is fair, when it comes to pension reform? Can Lege figure it out?

We have two weeks before the newly-elected Illinois General Assembly gets sworn into office. Although the real question is going to be if the current state Legislature will be capable of coming up with a solution to the problem of inadequate funding of pension programs.

Pension reform rhetoric will fill the air around the Statehouse in coming days. Whether that means a solution will be found remains questionable.

We have been told so many times that the pension problem threatens to take down all of state government because the shortfall has grown way too big. We fixed too many financial problems in the past by underfunding the pension expenses!

PERSONALLY, I THINK many legislators have grown immune to the harsh talk. They think, just like they do on many other issues, that the world can operate at their own snail’s pace. The fact that the General Assembly cut back the number of days it will convene before the transition shows it would prefer to do as little as it has to.

So I won’t be surprised if it turns out that nothing is accomplished on this particular issue prior to Jan. 9 – even though Gov. Pat Quinn has made it clear he wants this issue to be THE priority for the final few days of the old Legislature; which begin a week from Wednesday in the Illinois Senate.

A large part of the problem lies with the pension program that covers the retirement benefits of school teachers who worked for districts in suburban and rural Illinois areas.

Because a logical part of any solution probably is that the school districts should be providing for the pensions offered to the teachers who worked there – instead of having the state do it.

OF COURSE, THAT does not really fix the problem. It just shifts it off onto someone else!

And the school district officials across Illinois have made it clear they hate the idea. They are convinced (rightfully so, probably) that their own tax levies would have to be increased significantly for them to be able to have enough money to cover those expenses.

The Teachers Retirement System program estimates that taxpayers would have to come up with about $800 million more per year if such a shift were suddenly imposed.

That means property tax increases in the mid-2010s for many homeowners who think they’re already being overtaxed. It also means increased outrage from the public, which is the last thing many of our legislators want to incur.

SOME PEOPLE THINK that this can be imposed gradually – over a period of years. Which would create the illusion that property taxes are not increasing so quickly.

Even though the end result would be that $800 million hike by the time it’s all over.

I honestly think this is the factor that will keep legislators from doing anything. It won’t be “courage” to prevent a tax increase on their part. It will be “fear” of infuriating the constituents!

This is one of those instances where sitting back and doing nothing has the potential to cause problems. But political inertia is, all too often, what the Illinois General Assembly is all about.

OF COURSE, I also get amused whenever I hear the state legislators from Chicago proper complain about the REAL problem. That being that the Chicago Teachers Union came up with a separate system for funding pensions for retirees of the Chicago Public Schools.

Local property owners already cover those expenses as Chicago residents. But since they’re also Illinois residents, they also get hit with a tax levy that asks them to cover the suburban/rural teacher retirees as well.

Everybody wants to see themselves as a victim, and everybody else as the bully in this case. Although I’m sure if city teacher retirees were to get “their way” and the state had to cover city retirees too, we’d have all those rural residents claiming this as another example of Chicago “bullying” the rest of Illinois.

Confusing? Of course it is! I’m sure the legislators preparing for a return next week to the Statehouse are equally confounded – and unlikely to reach agreement on a solution to the overarching problem.


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