CHICAGO – Corporations and the right wing are waging an all out assault to roll back the state worker public pension system in the current Illinois legislative session. In response, the state’s labor movement, representing over 1 million members, has launched a massive public education and grassroots lobbying effort to protect pensions and worker rights, called “We Are One Illinois.”
The big business campaign blames public sector workers for the state’s $8 billion budget deficit. It pits public workers against resident taxpayers by pitting pension expenditures against funding for education, public safety and other vital services, all of which are suffering cuts.
Already furious that a regressive pension reform was rushed through the Democrat-controlled state legislature in March 2010 and signed by Gov. Pat Quinn, the labor movement has vowed to “fight to the end” against any new reform. That new law raises the retirement age for new hires to receive full benefits to 67 years old, lowers cost of living adjustments and forces workers to work longer for a higher pension, among other changes.
The full effect of the pension reform won’t take place for 30 years. However, given the nationally coordinated big business and right-wing assault on public workers, it has opened the door to the new attack in Illinois.
“While these public servants wake up every day to teach our children, run into burning buildings and keep our lights on, Illinois politicians have spent frivolously for decades,” said Dan Montgomery, president of the Illinois Federation of Teachers.
Montgomery was referring to 30 years of underfunding of state pensions by the legislature, a liability that is now said to be $79 billion.
“Now they want to point the finger at public employees and say they deserve less than promised? Trying to address the pension debt by lowering benefits is nothing more than making teachers and public employees pay for a problem they didn’t create,” he said.
Of the various measures being debated in the state legislature, the Republican proposals are by far the worst. They significantly boost employee contributions, slash benefits or force employees into 401k plans.
The Civic Federation, a big business group; the Koch brothers’ Americans for Prosperity and corporate media are trumpeting reports that shows Illinois’ pension system is in the worst shape of any in the country. The state was only able to cover 51 percent of its liabilities through 2009, according to the report.
However, the Center for Tax and Budget Accountability (CTBA) disputes the interpretation of the figures. The report is skewed, says the Center, because it reflects the value of the pensions during the worst of the economic crisis and ignores their recent rebound in net worth.
The labor movement, which was decisive to Quinn’s narrow victory in November, is not happy the governor has stated he is open to reform. Nor are they pleased with Democratic House Speaker Michael Madigan who has threatened to force legal action to overturn the state constitutional provision protecting the pensions of current employees.
State Senate President John Cullerton has vowed to oppose any effort to challenge the constitutionality of the pensions.
Cullerton issued a 76-page report that concludes “the General Assembly cannot unilaterally cut the pension benefits of current employees,” or to reduce the state’s existing pension liabilities.
The public education campaign will attempt to counter perceptions that public workers are getting lavish pensions they don’t pay into, causing the budget deficit. In reality, only about 3.4 percent of the state budget goes to pensions.
“The average annual pension benefit for a retired public employee is approximately $16,488 per year. In Illinois, that number is $17,112 per year, which includes the 28 percent of Illinois employees not covered by Social Security, who rely solely on their pension for retirement income,” according to the CTBA.
Government contributions cover only 26 percent of pensions; the rest are gotten through employee contributions and investments. Besides, the state saves over $1 billion by not paying into social security.
The big business campaign is also aimed at quelling any discussion of the real solution to the budget crisis: raising revenues from the state’s wealthy and big corporations. Illinois has the sixth most regressive state income tax system in the nation, mandated by the state’s constitution.
Ron Baiman, CTBA’s director of Budget and Policy Analysis said the organization proposes three immediate sources for new revenues: decoupling Illinois corporate tax from the federal bonus depreciation rules; expanding the sales tax to services and taxing high income retirees.
“But by far the most important is a constitutional amendment for a progressive income tax in the state, which is the long term solution,” says Baiman.
Image: Chicago demonstrates for workers’ rights.