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Illinois House advances plan to limit state retirees' annual pension increases

Illinois House Speaker Michael Madigan had reason to celebrate Thursday when his COLA bill passed the House. | AP file photo

UPDATED…

With reporting by Dave McKinney

SPRINGFIELD – The Illinois House voted Thursday to limit compounding annual cost-of-living increases for state retirees in a constitutionally questionable move targeting the largest driver of the state’s $97 billion pension crisis.

The Senate-bound measure, sponsored by House Speaker Michael Madigan (D-Chicago), passed the House on a 66-50 roll call and would affect current and retired state workers, university employees, legislators and downstate and suburban teachers. Judges weren’t included.

Under the measure, current and future public employees would have to wait until age 67 or five years after retirement to begin collecting annual increases on retirement benefits. Public employees’ annual cost-of-living increases would be capped at a compounding, 3-percent on the first $25,000 of their retirement annuities. Retirement income greater than $25,000 would increase by a flat $750 per year.

“This single benefit is the most expensive single component of the pension systems,” said Rep. Elaine Nekritz (D-Northbrook), who presented the measure on the House floor. “As painful as it is we will never get the increasing pension costs under control if we don’t address [the COLA’s].”

The vote represents the third incremental pension-reform measure to pass the House, following votes last week to cap the size of pensions and raise retirement ages.

“If we pass this bill and we all recognize the COLA is the big cost driver and the problem, then I think we’re in a position to finalize preparation of the bill and move a bill from the House to the Senate that includes all aspects of the problem,” Madigan said before the vote.

The measure received bipartisan support, including praise from House Minority Leader Tom Cross (R-Oswego).

“I think that at the end of the day we have to acknowledge that this is an arena that we have to play in to ensure that we have a pension system down the road,” Cross said.

However, at least one group of public retirees opposes the legislation. A prepared statement from the Illinois Retired Teachers Association conceded that the House’s move will ultimately be decided in court but said “retirees have a right to be mad as hell over what transpired.”

“Sixty-six people voted to break a 43-year promise to retired teachers, a promise embedded in the very core of our state’s rule of law: it’s Constitution,” IRTA executive director Jim Bachman said in the statement.

The vote puts the House on a collision course with the Senate, which passed its own incremental pension-reform plan Wednesday.

A much narrower approach, the Senate plan applied only to downstate and suburban teachers and would require them to choose keeping either the compounding, 3-percent cost-of-living increase on their pensions in retirement or state-subsidized health insurance, but not both.

Employing that choice is the only approach that doesn’t violate the state Constitution’s prohibition against the diminishment of pensions for public employees, Senate Democrats contend.

But backers of the House strategy say a union-backed court challenge is a certainty, and lawmakers need to act now to get the process underway so the Illinois Supreme Court can rule on the pension question.

“I realize there’s going to be a court case….That’s inevitable,” Cross said. “Until we pass something, we can’t get to that point. I think for the sanity of everyone involved, we need a decision. We need to get it to the courts. Depending on what they do, we may have to react. Who knows?”

While pushing for a more comprehensive approach, Senate Republican leader Christine Radogno (R-Lemont) indicated the House’s reforms could receive positive treatment in her chamber.

“Considered together, the package of pension bills from the House takes an approach similar to Senate Bill 35, which we supported in the Senate on Wednesday,” she said in a prepared statement. “Our members will want to review the specifics – and the total impact on our pension liabilities – but I think we could have significant support if and when we have the opportunity.”

Gov. Pat Quinn praised the House’s action, but acknowledged there remains a tough slog ahead.

“I’m encouraged by the positive steps recently taken by the Illinois General Assembly toward comprehensive pension reform,” Quinn said in a prepared statement.

“In addition, yesterday’s votes in the Illinois Senate indicate there is support for pension reform. There’s much more work to do, but I’m pleased to see progress being made.”