Illinois faces its moment of pension reform truth

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Sit for a few minutes in the waiting area outside the governor’s office on the 16th floor of the Thompson Center and the decaying financial condition of the state of Illinois is illustrated in clear, dismal fashion. From the disreputable acoustical tiles to the stained, ragged, blue carpeting repaired with strips of grimy duct tape, the whole thing gives off a vibe of threadbare neglect. The tubular, white, plastic sofas and scratched laminate tables would sit on a curb with the garbage all day and nobody would touch them. The only decoration is eight state flags stuck to the wall with pushpins. Some door moldings are held on with masking tape.

“Now would not be a good time to get carried away redecorating,” says Gov. Pat Quinn, in his inner office, where the furnishings are a little more presentable but, to be honest, the carpet still buckles into inch-tall watch-your-step crests and waves.

No, now is a good time to pull back hard on the throttle of the gravy train transporting state retirees. The state faces a choice: Either continue to hack away at vital services trying to fulfill skyrocketing pension obligations – pension costs are 17 percent of state expenditures this year – or cut future benefits.

The devil is in the details, of course, but the basic plan, for those just joining us: Retirement age gets pushed up to 67, cost-of-living adjustments are reduced, and retirees will be expected to pay something toward their health care – right now, 90 percent pay nothing.

The alternative: The state goes broke.

“If we don’t change the system, then folks coming up now, especially children, we won’t have the money for their schools, or education, or public safety,” Quinn says.

How did this happen? How did $83 billion in state pension commitments go unfunded? What were they thinking? Quinn blames bipartisan folly committed over decades.

“The folks who put us in this mess are from both parties,” he says. “Every governor and every session of the legislature, the choice at the end of the year came down to: ‘Do we pay this pensions thing or spend a little bit more money now on other things?’ They always picked now over requiring pension payments. So it got worse and worse.”

Further complicating a complicated situation, the Illinois constitution forbids revoking pension benefits, but health care isn’t included, supposedly, so the governor hopes to skirt the constitution by offering retirees a Hobson’s choice – accept the new plan with the cuts or keep the old system but lose your health care.

“You have to have a bargain. The constitution says you can’t alter a contract unilaterally,” says Quinn. “So what we’re doing is proposing a contract, but you still have a choice. You can still stay in the old system, and there’s no change at all. You’re not guaranteed by the constitution a pay raise or retiree health care. You have to make that choice. We’ve come to a fork in the road. We have to deal with it.”

He’s optimistic it’ll get done in Springfield.

“So far so good,” he says. “I think we’re going to win. I’m very optimistic that people in the legislature will rise to the occasion.”

Even if the reform is passed, might voters not decide to kill the messenger? Is Quinn sacrificing his own political future here?

“No, not really” he says. When I started this mission, I felt this is a moment in history to change the channel in Illinois, to radically change the way the government is going. That’s what I want to do – I want to do major things that make a difference for a generation.” In fact, he hopes it’ll be those who oppose his plan who’ll end up paying a price.

“We’ve really helped change the environment,” Quinn says. “Folks who vote ‘no’ on pension reform, I think will perhaps have political trouble. Most voters would say, ‘You better vote for that.’ Those who resist reform in pensions will suffer the consequences.”

Americans are used to abundance, to the idea that if you complain loudly enough, you’ll be spared any cuts. Are those days truly over?

“If we don’t [do this], there won’t be any money today, for schools,” says Quinn. “The most important thing adults can do, in my opinion, is sacrifice a bit of their present for their kids’ future. That’s America. We do things now that might be hard but are better for our kids’ future. So we have to make these changes. They’re necessary.”

Otherwise, he says, even more fiscal woe as the bond rating agencies “take their revenge.”

“Anybody who looks at the fiscal truth realizes what we have to do. [Debt] gets higher and higher. It never gets better,” he says. “The pension obligation is now three times what it was in 2008. If we don’t have this moment of truth, this rendezvous with reality, it’s just going to get more and more difficult. Do or die. We have to make a stand. This is Iwo Jima ­– we have to plant our flag and win the day.”

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