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June 2013 • www.saukvalleysun.com • Sauk Valley Sun
Local Legislative update
Tom Demmer State Representative, 90th Distruct It’s a busy season in the capitol. We’re working our way through the budget process, and we’re voting on a wide variety of legislation. And of course, we’re surrounded by proposals and negotiations on pension reform.
Pension reform is as big a challenge as the state has ever faced. We’re standing at the foot of a mountain of unfunded pension liability, around $100 billion of it. We’re facing a massive jump in our yearly pension contribution; next year’s payment will require a $936 million increase over this year. Our pension crisis is the result of several factors: years of underfunding by the state, pension benefit increases that weren’t adequately paid for, longer life expectancies, lower investment yields, and more. The current path is unsustainable. If we don’t do something, the pension system will implode. To help meet our growing annual pension contribution, the state has taken
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several steps over the past few years. Personal and corporate income taxes were significantly increased. Cuts were made to nearly every state program, including education and public safety. State facilities were closed. Entitlement programs like Medicaid saw major reform laws. And yet we’re still struggling to keep our head above water because of the huge pension obligation. Earlier this session, some drastic pension changes were proposed by Speaker Michael Madigan, including elimination of cost of living increases, an across the board retirement age increase, and a large employee contribution increase. I didn’t support those proposals. But I knew something needed to be done. I voted for SB1, a bi-
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partisan, compromise bill that protects cost of living adjustments but sets an upper limit. It increases retirement age, but not if you’re a month away from retirement, only if you’re under 45 years old. It includes a smaller employee contribution increase. And, just as importantly, it includes a requirement that the state make its contribution to the pension system every year. We can’t continue the underfunding that led us to today’s crisis. This bill brings stability and security to the pension system. It ensures that retirees will still get a monthly check in the future. And it prevents us from having to make cuts year after year to critical state services like education, public safety, developmental disability and mental health services, and important community safety nets. This bill, SB1, passed the House and was sent back to the Senate for consideration. Governor Quinn indicated he would sign it if the Senate concurs with the House amendment. Another proposal has surfaced, originated by Senate President John Cullerton.
That proposal is SB2404 and is supported by several public employee unions. The bill is different from the House pension reform plan in that it includes the concept of consideration. In this plan, employees would be given a choice between changes to annual cost of living adjustments and access to subsidized healthcare in retirement. Though it has the support of several unions, it’s still opposed by some retiree groups. And there aren’t any actuarial estimates of the savings the plan would bring, though unofficial projections say it could reduce the unfunded liability by 10%--or just a third as much as the House proposal would save. I’m keeping an open mind
about the Senate proposal, though I’m worried that it wouldn’t solve the problem. An incomplete solution would just delay the inevitable, and put us back in the same boat within a few years. There’s plenty of blame to go around for causing the situation we’re in today. But I ran for office with a pledge that I’d work to solve problems and stop kicking the can down the road. No pension reform solution is easy—just as the cuts to all other state spending haven’t been easy over the past several years. But something needs to be done, and I’ll be in Springfield for the rest of the month to try and get the job done.
We are here to serve you. Please stop by or contact my office with questions or comments. Springfield office: 222-N Stratton Office Building Springfield, IL 62706 (217) 782-0535 District office: 1221 Currency Court Suite B Rochelle, IL 61068 (815) 561-3690 Email: tom@tomdemmer.com Website: www.tomdemmer.com
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