Illinois Dems Push Through Pension Diversion Budget

May 31, 2005 (PLANSPONSOR.com) - Democrats in the Illinois state legislature on Sunday rallied behind a budget plan that slashes pension payments in favor of funding other state expenses and sent the budget measure on to Governor Rod Blagojevich, who is expected to sign it into law.

In a session marked by heated debate and even outright shouting matches between the two sides, Republicans uniformly blasted the pension diversion proposal, which would fill a huge state budget hole by diverting $2 billion earmarked for five state pension funds over the next two years, according to a Chicago Tribune report (See Illinois Budget Pact Diverts Pension Dollars ). Republicans contend that the move would short the state’s pension systems by $38.5 billion over the next 40 years. The state’s combined pension liability is about $35 billion.

No pension benefits would be reduced for public university employees, state workers, elected officials, judges and teachers outside of Chicago . The plan would impose pension reforms that Democrats said would save $70 billion in future costs – an estimate Republicans contend is more like $12 billion. The plan provides state funding to avert massive fare hikes and service reductions that had been threatened for July by the Chicago Transit Authority and give $300 million in new funding for schools.

The pension-diversion bill, backed by Blagojevich, was passed on the strength of all-Democratic votes in the House and Senate. The measure passed the House on a 61-53 vote with only two House Democrats joining Republicans in voting against the measure. In a strictly party line Senate vote, the measure passed on a 32-26 roll call. However, some Democrats who voted for the measure were less than enthusiastic about adding more debt to the state’s already underfunded pension system and admitted that trading for projects helped score the votes to pass.

Heated Debate

The acrimony between majority Democrats and minority Republicans became so heated that a shouting match developed between Senate President Emil Jones and Senate Republican leader Frank Watson during a committee hearing on the plan. The committee’s chairman, Senator Ira Silverstein gaveled them both down and said, “Excuse me, you guys, take it outside,” according to accounts of the exchange in news reports.

On the Senate floor, Watson called the Democrats’ move a “raid” of the pension system aimed at conveniently getting them through the next election. But the Republican warned Democrats that they could be politically vulnerable for the move in next year’s elections. “This is totally irresponsible, and you know it,” Watson said. “This is a totally irresponsible raid.”

According to the Tribune, Democrats contended Republicans acted uncooperative in budget negotiations and wanted to push the legislature past its Tuesday adjournment deadline. Once the deadline is passed, Republican votes are needed to approve a state budget.

“We sat at the bargaining table, and we’re still waiting for your plan,” Representative Jay Hoffman, a close Blagojevich ally, told Republicans, according to reports. “Do you want to push us into overtime again? Is that what it’s all about?”

«