While readers have been bombarded with stories of Chicago’s financial and police crises, the war of words resumed in Springfield last week. The state of Illinois, which has operated without a budget since June of 2015, is rapidly facing it’s own moment of truth. Republican Governor Bruce Rauner has asked the Illinois Labor Relations Board to declare an impasse in the states negotiations with AFSCME. If that happens, then Illinois residents will finally begin to feel the true impacts of a government shutdown.
The state does not now have a budget, so Illinois residents have been spared the true impact of a government shutdown. State operations have run because of a series of court judgments and consent decrees, but if Rauner gets his way, and a budget impasse is declared, Illinoisan will begin to feel the real impacts of what decades of indecision and mismanagement have brought to the state. The situation is coming to a head, and in spite of the headlines and articles, Illinois’ crisis did not begin with the election of Republican Governor Bruce Rauner. The roots of this crisis can be traced back to another Republican Governor, Jim Edgar with the assistance of Illinois’ most powerful Democrat, Speaker of the House Mike Madigan.
In 1994, then-Governor Jim Edgar introduced a bipartisan bill that he claimed would fix Illinois’ $15 billion pension crisis. According to state law, Illinois pensions must be funded, and with a balloon payment looming and Illinois short on the cash, Edgar conspired with Madigan to extend the terms on the debt to 2045, essentially leaving future governors to deal with the mess. The Edgar solution relied on lower earlier pension payments (during his term) gradually increasing them over time. Edgar left office in 1999, a wildly popular and respected governor, and has since gone on to become one of Illinois’ senior statesmen. In reality however, he left the future Illinois a financial mess that residents are paying for to this day.
Disgraced Illinois Governor Rod Blagojevich did not help the situation when he and Speaker Madigan passed what was infamously dubbed the “pension holiday.” That “holiday” allowed the Illinois General Assembly to skip a $2 billion dollar pension payment and reinvest those dollars into capital projects, many that accrued Blagojevich, favor with the Black community. Popular programs such as free senior rides on CTA, Kidstart, and a variety of road and building projects were funded, but union pensions were not. Not only were the pensions not funded, but also the interest accrued and in some cases compounded. Now the payment has come due.
7% Percent Crippling 93%
According to Bloomberg BNA, of the state of Illinois’ almost five and a half million workers, only approximately 7%, or 383,600 have government-backed pensions. Many question how 7% of the state’s working population could be dragging down the other 93% of the population. For some the answer is simple. They say, “We live in a different world, just cut the pensions and move on,” but in Illinois politics it’s not that simple.
But unions are the lifeblood of Illinois politics, and while they are often closely associated with Democrats, many downstate public employee unions are filled conservative Republicans who closely identify with local Republicans. They supply money, volunteers, and mail, all essential components to successful campaigns, and they take their retirement benefits seriously. In fact, the state’s largest employee union, AFSCME, has over 37,000 active members and approximately 100,000 retirees. While active members to recognize that the benefits packages of the past will most likely go from defined benefits to defined contribution, any discussion of changing retirees’ plans is met with fierce resistance.
Retirees complain that they did their part by allowing their retirement payments to be taken out of every check, and now it’s the state’s time to pay up. It’s a hard sell for the Governor and the Illinois constituents who will have to make up the difference. As Illinoisans continue to see their taxes rise while services continue to get cut, the public employee union retirees stand to bear the brunt of years of mismanagement.
The state’s bond a rating is crashing, CPS is on the brink of bankruptcy, and the impending literal shutdown of state government is looming. There are reports that Governor Rauner and Illinois Senate President John Cullerton are attempting to forge ahead with a solution, while Illinois House Speaker Mike Madigan refuses to participate in reforming a mess that all agree he helped create. One cannot deny Governor Rauner’s role in the situation Illinois is facing today, but the truth is the state’s mess was not created during Rauner’s one year in office, and will take until long after he is gone to correct.
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