Policy experts warned the state’s unfunded pension debt is contributing to Illinois’ population losses, service shortages and high taxes, but said any change would need to be endorsed by the pensioners and their unions.
The state has more than $133 billion in unfunded pension liabilities. Without changes, the state will have to put $10 billion toward pension payments next year. That’s more than a quarter of the state’s budget. The City Club of Chicago hosted a panel discussion Monday about what needs to be done to address the issue.
Unfunded pension liability is creating a high tax burden and an overall uncertain environment that is sending people to other states, Civic Federation President Lawrence Msall said.
“There has to be a combination. I can’t just be all revenue. We are losing population in Illinois and in Chicago,” he said. “Uncertainty is one of the most corrosive conditions a government [...] can have.”
Another advocate said the state’s constitutional protection of pension benefits needs to change, but it must be done with the support of unions, which have yet to approve any changes that would reduce benefits for members.
“We are all paying more for these pension benefits. We’re contributing more than we ever have been and there’s been nothing done on the other side of the ledger,” said Adam Schuster, research director with the Illinois Policy Institute.
State Sen. Heather Steans, D-Chicago, who joked about being the only lawmaker brave enough to sit on the panel and take the criticism, didn’t agree with the others that Springfield hasn’t tried to fix the issue. She said trying to change the state’s constitution would be a waste of effort because there are other constitutional protections, including the federal contracts clause, that would keep lawmakers from altering existing and retired worker pension arrangements.
“I’d much rather have our limited ability to focus on what we’re going to do here to be pragmatic, reasonable and something we actually hope to be able to achieve,” she said.
Arizona, which has the same pension protection clause in its state constitution, recently amended benefits. Steans said union leaders backed the change and didn’t challenge the measure in court.