— Illinois lawmakers narrowly approved a historic, sweeping overhaul of government worker pension systems Tuesday, overcoming years of political and philosophical differences in an attempt to address one of the state's most pressing financial problems.
The collective exhale from the state's political leaders may be short-lived, however. Even before Gov. Pat Quinn carries through with his promise to sign the bill, unions are prepping a lawsuit to try to overturn it. They contend the benefit cuts are unconstitutional and unfair to employees and retirees.
Supporters hailed the bill as a solution that would "ensure retirement security" for current and retired state workers, public school teachers outside Chicago, university employees and state public officials. They also said it would end the squeeze on state tax dollars that increased pension costs have placed on education and social services.
But Republican opponents who argued that the measure doesn't do enough to decrease the state's costs contended it will lead to the continuation of a 2011 state income tax increase that was billed as temporary.
The Democratic governor, who is seeking re-election next year, would not discuss whether an extension of the tax hike will be required. He did, however, take a victory lap, relishing a breakthrough after years of stalemate on the controversial but pressing issue.
"The people have won," said Quinn, who declared from his Capitol office that Tuesday, the 195th anniversary of Illinois' statehood, was a "great day for the taxpayers of Illinois."
"We have all won," he said.
But Senate President John Cullerton, whose earlier union-backed plan to curb pension spending was stymied by House Speaker Michael Madigan, said he remained concerned that the package passed by lawmakers violated a state constitutional ban on diminishing or impairing public pension benefits.
Cullerton, whose Senate Democrats had been viewed as closer to the unions than Madigan's House majority, said he viewed it important to get something before the courts to decide whether the approach is legal.
"I think the bill has serious constitutional problems, I've made that clear from the start, but now it's in front of the court and they can decide," Cullerton said.
He said if the measure is struck down, lawmakers might be more inclined to take up his Senate-passed measure, which Madigan never called for a vote.
Cullerton's comments could be used as Exhibit A by union leaders who are less than happy with Quinn and Democrats who voted for the pension cuts.
"This is no victory for Illinois, but a dark day for its citizens and public servants," declared a statement by "We Are One," a coalition of several major unions.
Dan Montgomery, president of the Illinois Federation of Teachers, was blunt: "We call it theft."
The measure would raise the retirement age for many state workers and scale back the size of and even skip some annual cost-of-living increases. In return, the state would put a few hundred dollars into most workers' pockets by slightly reducing the amount of money they have to chip in from their paychecks.
The legislation also would keep intact current benefits for some of the longest-serving, lowest-paid workers who get the smallest retirement checks until their benefits grow to certain levels. In addition, it would allow an opportunity for some workers to join a 401(k)-style plan and have more input in managing their retirement nest eggs.
The changes are projected to erase a $100 billion pension shortfall over three decades. If no changes were made, the state would be on the hook for about $374 billion in pension payments over the next 30 years. With the proposed changes, the state's price tag over that same period would drop to $214 billion — a savings of $160 billion.
About $90 billion to $100 billion of that savings is expected to come from benefit cuts. The other $60 billion to $70 billion in savings is expected to come from the state owing less as it seeks to pay down the pension debt sooner. The proposal would see the state putting an additional $1 billion a year into the systems by 2020.
After years of passive neglect, Illinois now holds the title of having the worst-funded state pension system in the nation. Rating agencies have repeatedly downgraded the state's credit, which costs taxpayers tens of millions of dollars more when the state borrows money to build roads, repair bridges and launch other public works projects.
Governors and lawmakers shortchanged the system, skipped payments, improved benefits and carved out sweetheart windfalls for friends as the debt grew. The proposal attempts to shut down the gravy train for politically connected people who managed to get into the pension system through various associations, ranging from school administration groups to the state's Special Olympics.