Quinn scolds lawmakers for failing to curb pension crisis

Illinois Gov. Pat Quinn delivers his State of the Budget address to a joint session of the General Assembly in the House chambers at the Illinois State Capitol Wednesday, March 6, 2013, in Springfield Ill. (AP Photo/Seth Perlman)
Posted: Mar. 6, 2013 9:14 pm Updated: Mar. 21, 2013 7:13 am

Herald-Whig Senior Writer

SPRINGFIELD, Ill. — Calling it the "most difficult budget ever," Gov. Pat Quinn called for spending cuts and he chided lawmakers for not fixing the nation's worst public pension deficit.

"Let's get the job done," Quinn said as he wrapped up a speech that put blame for the budget on the Legislature.

Quinn's speech did not even mention the $400 million cut in public education. Aides giving press interviews after the speech said Quinn opposes those cuts, but he has no options due to rising costs for pension contributions in schools.

After years of state underfunding, this year's contribution to the five pension systems is supposed to be $6 billion, and pension bond payments of about $1.6 billion also are due. That represents about 21.5 percent of Quinn's proposed budget. The long-term deficit is estimated at $96.7 billion to cover all pension obligations and benefits for future retirees.

Jack Lavin, Quinn's chief of staff, said teacher pension costs rose $480 million in the past year, forcing those cuts.

Quinn spokeswoman Brooke Anderson said the governor doesn't want to make education cuts but was forced to do so because of the "five alarm fire" caused by legislative inaction on pensions.

State Sen. John Sullivan, D-Rushville, said Quinn's budget plan is only the first step in a long process of passing a state spending plan.

"While I am extremely disappointed the governor's budget cut $400 million from our K-12 education, I am pleased to see additional funding for staff at our veterans homes," Sullivan said.

Quinn proposed closing tax "loopholes" to produce money to pay down the state's gaping backlog of $9 billion it owes to vendors. He said the budget will pay down at least $2 billion of that backlog by the end of fiscal 2014.

Illinois Department of Revenue Director Brian Hamer said there are three loopholes that have not worked as expected. Eliminating the tax breaks would bring in $445 million to help the state pay down overdue bills.

Senate President John Cullerton, D-Chicago, said he plans a committee hearing next week on pension legislation. It would offer employees a choice on whether they want retirement health care or annual cost-of-living increases, combined with a House-authored backup plan that would reduce post-career benefits and increase employee contributions.

"He's frustrated, and he wants us to do something, so we're going to start next week," Cullerton said after the speech, while noting the ongoing struggles that have prevented progress thus far.

The state's contribution will represent nearly one-fifth of the $35.6 billion general revenue — money spent for state operations such as education and public safety — expected to come in during the budget year that begins July 1.

"For those with higher pensions, the cost of living adjustment should be suspended until the entire pension system achieves better balance," Quinn said, without elaborating, but then added, "The basic pension amount that has already been accrued by our current and former employees should not be touched."

Quinn left open the possibility of supporting an expanded gambling law, proposals for which he's vetoed twice in the past year, saying new money from any approved gambling measure should go to schools.

Lavin told reporters the budget would have been even worse if not for 15 months of negotiations that led to last weeks approval of a contract with AFSCME, the largest union of state workers. Lavin said the contract will save an estimated $900 million in health care costs, while boosting wages about $200 million.

"Our net savings is about $700 million over the life of the contract," Lavin said.

Quinn's budget proposal calls for $35.6 billion in spending, but other off-budget items bring the state's total operations to $62.4 billion.

The Associated Press provided information for this story.