No deal on Illinois pension fix, talks to continue

CHICAGO Sat Jan 5, 2013 5:55pm EST

1 of 2. Illinois Governor Pat Quinn delivers his State of the State address to the joint session of the General Assembly in the House Chambers of the Illinois State Capitol in Springfield, Illinois February 1, 2012.

Credit: Reuters/Sarah Conard

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CHICAGO (Reuters) - A fix for Illinois' public pension crisis remained elusive on Saturday after a meeting between Democratic Governor Pat Quinn and legislative leaders failed to produce a deal.

State House of Representatives Speaker Michael Madigan, a Democrat, said that it was still possible to reach a deal in time to be voted on early next week by the Legislature.

"There's no resolution today. We're going to continue to work throughout the weekend and right through Tuesday of next week to try and move legislation that will solve this funding problem of Illinois pension systems," Madigan told reporters following the meeting.

The House has scheduled a Sunday-through-Tuesday lame-duck session ahead of the start of a new legislative session on Wednesday. Quinn has been pushing the Democratic-controlled Legislature to pass pension reforms before the new session begins.

Illinois' finances are buckling under the weight of a huge $96 billion unfunded pension liability that is rapidly siphoning off money needed for essential state services such as healthcare and public safety.

The lack of a pension fix has led to downgrades of Illinois' credit ratings, with Moody's Investors Service warning last month it could drop Illinois below the current A2 rating, the lowest among the states it rates.

A potential breakthrough on a pension fix surfaced on Friday when Quinn announced that Madigan had agreed to defer until a later date a measure to gradually shift state payments for teacher pensions onto local school districts. Republican lawmakers were concerned the move would lead to local property tax hikes.

Madigan on Saturday said that will lead to a partial pension fix, leaving lawmakers to deal mainly with benefit levels. The Teachers' Retirement System, which includes educators in the state outside of the Chicago Public Schools, is the largest of the five state pension funds and accounts for the lion's share of the unfunded liability.

Legislative leaders discussed a series of steps aimed at fully funding the pension system in 30 years, including boosting worker contributions, raising retirement ages and limiting cost-of-living adjustments for retirees.

But differences of opinion remained about the structure and, ultimately, the constitutionality of the bill. Public labor union officials have warned they will go to court to fight pension changes and they are confident they will prevail given strong protections for pension benefits in the Illinois Constitution.

" The question is can you bring these all together and get a bill that can pass and be signed by the governor," Madigan said.

The governor did not make any statements after the meeting. A spokeswoman said he would continue to push for a deal until the last moments of the lame-duck session.

"We still want to see pension reform done by January 9. We're going to be working on it every hour up until that time. Progress has been made, but no deal yet, no solid agreement yet," said Quinn spokeswoman Brooke Anderson. (Additional reporting by Karen Pierog; Editing by Will Dunham and Eric Walsh)

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Comments (4)
TheNewWorld wrote:
Democrats and their state funded pensions. Unions vote for the politician, politician votes for the pensions, they all retire on your dime and aren’t around when the budget crumbles. Here is my solution, don’t pay the pensions. They didn’t allow the tax payer at the bargaining table, the tax payer shouldn’t be footing the bill.

Jan 05, 2013 5:19pm EST  --  Report as abuse
victor672 wrote:
But the public employee unions (such as AFSCME and SEIU) own the crooked, corrupt Illinois politicians. Talk about conflicted!

Jan 05, 2013 6:03pm EST  --  Report as abuse
InMotion wrote:
Ignorance abounds concerning public employee pensions. Public employees pay into their pension as everyone else does for Social Security. The state as the employer is responsible for part of the funding of the pension in the same way that employers in the private sector pay into social security for their employees. the problems in funding have come about in Illinois because the legislature has for decades not made their full contribution and now all of that is showing up and the states are trying to get out of their mess that THEY created. Stop blaming the workers and the unions and put the blame where it belongs!

Jan 05, 2013 8:33pm EST  --  Report as abuse
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