CHICAGO, Nov 14 (Reuters) - Illinois’ public pension crisis has grown so severe that it can no longer be fixed, a Chicago business group warned on Wednesday.
The Civic Committee of the Commercial Club of Chicago chastised political leaders for inaction on dealing with the state’s $83 billion unfunded pension liability, along with other debts that have ballooned to nearly $200 billion. The group also expressed disappointment in the results of last week’s general election, which gave Democrats a veto-proof majority in the Illinois House and Senate.
“Instead, it appears we will soon have even more legislators who aren’t prepared or willing to make the tough decisions necessary to save our state,” the Civic Committee said in a memo to its members, who include the heads of Hyatt Hotels Corp, the Chicago Board Options Exchange, Motorola and Allstate.
The group, which launched an “Illinois is broke” campaign in 2010 to raise public awareness about the state’s fiscal condition, also sent a letter to Democratic Governor Pat Quinn bemoaning a lack of political courage to deal with the state’s problems.
While Quinn has been pushing for pension reforms, attempts to push bills through the state legislature have failed. The absence of substantial reforms and a nagging structural budget deficit have led to downgrades of Illinois’ already low credit ratings relative to other states.
A report released last month by a national State Budget Crisis Task Force co-headed by former Federal Reserve Chairman Paul Volcker concluded that Illinois’ budget was no longer sustainable.
The Civic Committee warned that future pension payments are in jeopardy, and it called for meaningful reforms that include an end to cost-of-living increases for pension recipients, a salary cap for pension purposes, a higher retirement age, and a phase-out of Illinois pension payments for non-state workers.
Currently, Illinois makes payments for all public school teachers except those in Chicago and for universities and colleges. Republicans lawmakers have objected to shifting pension costs onto local school districts fearing the move would lead to higher property taxes.
Quinn, who supported a cost shift, as well as a plan to raise workers’ pension contributions and retirement age, while reducing cost-of-living adjustments, has faced the wrath of public worker unions.