Look at the court ruling of 19 march-- so much for " guarantee"-- the first step
CHICAGO (Reuters) - Illinois lawmakers begin a two-month push on Monday to enact major pension reform, under pressure from taxpayers, workers, business groups and bond investors to fix the worst-funded state pension system in the United States.
The key objective: To put together a package of reform measures that are capable of addressing a nearly $100 billion unfunded pension liability, while still standing up to anticipated court challenges.
The state's constitution prohibits reduction in pension benefits to active and retired workers, and reform efforts have been inhibited by warnings made by union groups and others that they intend to file lawsuits to block implementation of many reforms.
The president of the Illinois Senate, John Cullerton, a Democrat, said he is preparing a two-pronged attack. He first will seek to pass a bill similar to the measure the House approved late last month that would impose restrictions on cost-of-living increases to pension payments to retirees.
As a back up, in case those reforms hit a constitutional roadblock, Cullerton said he will seek to offer workers a choice. They will either receive the benefits already promised, but have to forego state-funded healthcare care in retirement, or they will accept limits on cost-of-living increases in their pensions and still have access to state-funded healthcare.
"I'm trying to come up with a winning combination to pass a bill," Cullerton said.
Pensions are devouring an ever-increasing share of state revenue. That is a worry for the state's bondholders, as well as vendors, school districts and others doing business with a state that is running as much as a year behind on $9 billion in unpaid bills.
Illinois' credit ratings have been downgraded to the lowest levels among U.S. states as solutions to the pension problem remain elusive, and studies have shown Illinois has the lowest funding ratio of any state in the nation.
The legislative push that begins Monday comes two weeks after the state's lower chamber passed a reform plan that, if adopted by the Senate and signed into law by Governor Pat Quinn, could save as much as $100 billion in pension costs over 30 years, according to backers.
The House measure, which was sponsored by the powerful speaker of the House, Michael Madigan, a Democrat, limits cost-of-living allowances (COLAs) on pension payments, a significant factor in Illinois' rising pension costs. Cuts to COLAs also were part of another, more comprehensive bill that went down to defeat in the Senate on March 20. None of the reform bills passed so far by the House or Senate has been taken up in the other's chamber.
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