Pension costs in Illinois now account for 15 percent of a $33.7 billion budget that Gov. Pat Quinn signed in June, compared with 6 percent a few years ago. All told, the state is on the hook for more than $83 billion in unfunded pension liabilities, the worst of any state in the country.
No one in the state denies the crisis at hand. But the protracted fight over how to fix it has been a struggle for Mr. Quinn, a Democrat who is caught between angry unions that helped elect him in 2010 and Republicans asking for deeper cuts as concern grows that bond rating agencies could downgrade the state if a compromise cannot be reached.
“Today is a disappointing day for Illinois taxpayers,” Mr. Quinn said in a statement on Friday evening. “The only thing standing between our state and pension reform is politics.”
States hit hard by the recession across the country have been tinkering with their pension programs in recent years in an effort to fix long-term financing problems as millions of baby boomers reach retirement. Between 2009 and 2011, 43 states enacted some form of major alterations to their retirement plans for public employees and teachers, according to the National Conference of State Legislatures. Such laws were a rarity before 2005.
Lawmakers in Illinois have over the years voted to skip contributions to the state’s pension funds, choosing to use the money for services and other budget essentials instead. For months, they have been divided over new legislation to shore up their pension shortfalls.
One measure would give state employees a grim choice: keep the current 3 percent compounded cost-of-living adjustment to their retirement checks each year and lose state-sponsored health insurance, or keep health insurance, but with lesser annual increases.
That plan, which failed to come to a vote in the General Assembly after negotiations broke down on Friday, would have eliminated the state’s unfunded liabilities over the next 30 years, according to the governor’s budget office.
Union leaders vehemently opposed the bill and said the governor was making public workers carry the burden of a problem that they did not cause. They have suggested closing corporate tax loopholes to help raise state revenue.
At the Illinois State Fair this week, a crowd of union-led protesters, upset with the governor’s proposal, booed throughout his speech as a plane flying overhead pulled a sign that read “Gov. Quinn — Unfair to Workers.” Some were demonstrating again at the State Capitol on Friday.
“You would think a Democratic governor would be on the side of the working people,” said Henry Bayer, executive director of the American Federation of State, County and Municipal Employees Council 31, a public services workers’ union in Illinois, calling the proposed cuts “a Republican program.”
But Mr. Quinn has not felt much love from state Republicans either. They say the proposed cuts are not comprehensive enough because they do not address pensions for teachers, university employees or judges.
“These pension systems in Illinois are on the brink of near collapse,” said Tom Cross, the House Republican leader, stressing the need to “do it right.”
A scaled-back pension bill was debated on the House floor on Friday that would have only altered elected officials’ pension benefits as a “first step.” But even that failed to come to a vote in the Democrat-dominated legislature after it became clear it could not get enough support.
The governor’s budget office, meanwhile, projects that the state’s pension debt continues to grow by $12.6 million each day the debate continues.R Soft Web Hosting