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December 3, 2013
By: Rick Lyman

SPRINGFIELD, IL – The Illinois legislature on Tuesday ended a day of emotional debate and fierce back-room arm-twisting by passing a deal to shore up the state’s debt-engulfed pension system by trimming retiree benefits and increasing state contributions.

With one of the nation’s worst-financed state employee pension systems — some $100 billion in arrears — Illinois has been the focus of intense attention across the country as states and municipalities struggle to come to grips with their own public pension problems. The compromise reached in Illinois, a staunchly blue state with a strong labor movement that had successfully resisted previous efforts to trim pensions, could provide a template for agreements elsewhere.

The top leaders of both legislative houses, Democrats and Republicans, had cobbled together the bill and pushed strenuously for its passage, supported by the state Chamber of Commerce and the Illinois Farm Bureau. Union leaders and some Democratic lawmakers opposed it, just as strenuously, arguing that the bill fell too harshly on state workers who had paid into their pension plans over the years with the understanding that the benefits would be there when they retired. Some Republicans also opposed the bill, saying it did not trim enough to solve the state’s pension troubles.

“Today, we have won,” Gov. Pat Quinn, who made overhauling the pension system a focus of his administration, said in a statement after the vote. “This landmark legislation is a bipartisan solution that squarely addresses the most difficult fiscal issue Illinois has ever confronted.” He is expected to sign the legislation on Wednesday.

We Are One Illinois, a coalition of labor unions that opposed the bill, issued a very different assessment. “This is no victory for Illinois,” it said in a statement, “but a dark day for its citizens and public servants.”

The battle now turns to the courts, where union leaders have promised to take the legislation. Some opponents have asserted that it violates the State Constitution by illegally lowering pension benefits.

The plan’s architects said it will generate $90 billion to $100 billion in savings by curtailing cost-of-living increases for retirees, offering an optional 401(k) plan for those willing to leave the pension system, capping the salary level used to calculate pension benefits and raising the retirement age for younger workers, in some cases by five years. In exchange, workers were to see their pension contributions drop by 1 percent. The measure also calls for the state to increase state payments into the system by $60 billion to $70 billion.

The legislature opened late Tuesday morning, and almost immediately recessed so both parties could go into closed-door caucus and leaders could count votes. The fruit of those efforts became clear through the afternoon, as the measure passed by 30 to 24 in the Senate, with three members voting “present,” and in the House by 62 to 53, with one voting “present.”

In both chambers, the debate was fiercely emotional.

“It’s difficult work we have to do and a difficult vote we have to take,” said State Senator Kwame Raoul, a Chicago Democrat who was a co-chairman of the conference committee that passed the legislation. “We cannot continue to be the embarrassment of the nation.”

There was no cheering or celebration when the bill passed in the Senate.

“I don’t take any joy in this action today,” said Representative Elaine Nekritz, a supporter of the legislation. “But it is the responsible thing to provide for a pension system that gives workers retirement security without bankrupting our state.”

Opponents were even more emphatic.

“This is more than a vote, this is defining the future of American workers,” said Senator William Delgado, a Democrat. “This is morally corrupt. We are robbing the benefits of these hard-working people.”

The break in the negotiations came last week when the Democratic and Republican leaders in the legislature ended months of wrangling and agreed on a plan that they said would save $160 billion and erase the state’s pension debt by 2044. It was the first time that top leaders from both parties had been able to reach a deal.

Negotiations had been particularly difficult in a state with a strong labor tradition. And Mr. Quinn, a Democrat, was also under pressure put the matter to rest before next year’s election.

The vote on Tuesday came one day after the deadline for candidates to file to run for state office in next year’s primary, so legislators could know whether they faced a primary opponent. Democrats hold a solid majority in the State Senate.

Many states have already voted to trim pension payments and make other adjustments to address skyrocketing retirement costs, but Illinois had thus far avoided doing so, with unions arguing that members should not be punished for mismanagement of the fund. Meanwhile, its pension mess got steadily worse, helping give Illinois the lowest credit rating of any state.

Opposition to the plan rose swiftly, particularly from union leaders who found it too draconian. But two of the governor’s Republican challengers also denounced the deal, as too lenient. The state Chamber of Commerce also said it preferred even stronger measures to trim back state pensions.

“The truth is that the savings in this bill are both insufficient and will make true, comprehensive reform more difficult,” said one challenger, Bruce Rauner, a wealthy business executive. Another challenger, the state treasurer, Dan Rutherford, said Monday that he also opposed the bill and that he did not believe it would survive a court challenge.

Facing them in next year’s Republican primary will be State Senator Bill Brady, who supported the bill, and State Senator Kirk Dillard, who said that he would oppose the legislation.

Mayor Rahm Emanuel of Chicago, whose city has retirement issues of its own — payments to the local pension fund are expected to more than double to almost $1.1 billion starting in 2015 — said he hoped the compromise would provide a template for Chicago, as well. In a statement on Tuesday, Mr. Emanuel said “the work is far from finished.”

“The pension crisis is not truly solved until relief is brought to Chicago and all of the other local governments across our state that are standing on the brink of a fiscal cliff because of our pension liabilities,” he said.

Steven Yaccino contributed reporting from Chicago.

Copyright 2013 The New York Times Company

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