Pat Quinn and the Senate's
top Democrat on Tuesday both proposed that Illinois offer new
employees fewer pension benefits than current workers -- creating a
The new governor is preparing to present a budget plan next
Wednesday that he says will include "castor oil," but he stopped
short of saying an income tax increase would be the bad medicine he
But Senate President John Cullerton later told The
that without a tax increase, Illinois faces "pretty Draconian cuts,"
offer suggestions for reductions and help if taxes are needed.
Quinn, speaking to reporters in his Capitol office, said his top
focus is to "cut, cut and cut." But he continued to warn of possible
tax increases, suggesting an income tax hike could be cushioned by
increasing the personal exemption, which would proportionally offer
greater tax shelter to less-affluent residents.
A "two-tiered" pension system would reduce benefits for future state
employees to soften the pain of paying up $54 billion in unfunded
obligations to five pension systems. There would be no change for
people already on the payroll.
"The people of Illinois who pay the taxes, they don't have a
Cadillac pension plan, and we're going to have to take a look at
everything in state government," the Democratic governor said.
He would not discuss specifics of what he will propose, but
dismissed the notion that it would be a defined-contribution plan
like a private-sector 401(k).
The amount saved depends on how much benefits are reduced, Cullerton
said. Current law calls for a $4 billion contribution in the budget
year that begins July 1.
"The only way we can pay less money into the pension fund next
fiscal year is if we lower the overall benefit that we'll have to
pay out over a 40-year period," he said.
A pension change would likely have to be negotiated with employees'
unions. The largest one, the
American Federation of State, County and Municipal Employees,
opposes the idea, said spokesman Anders Lindall. He called Illinois'
retirement plan "modest," with an AFSCME retiree receiving an
average annual pension of $18,000.
"A reduction in benefits for future employees is not going to
appreciably reduce costs anytime soon," Lindall said.
Cullerton, acknowledged union complaints that the problem is that
state government has not kept up with its payments while employees
have paid their share.
"Our response has to be, 'Folks, in order for us to pay your current
members, we need to do something here,"' Cullerton said.
[to top of second column]
Democratic House Speaker
Michael Madigan is open to
the idea and currently sponsors legislation that would set up a
similar system for the General Assembly's pension plan, said
spokesman Steve Brown.
Cullerton called on Senate members to work together to find budget
solutions, but Senate Republican Leader
Christine Radogno of
Lemont said Cullerton's Deficit Reduction Committee is "playing out
as a cover for why we can't do anything differently and have to
Radogno supports a new pension setup but is reticent to immediately
reduce state payments. She supports Quinn's call for a $25 billion
capital construction plan but, like Quinn, opposes Cullerton's idea
to pay for it with an increase in the gasoline tax.
Radogno would rather reconsider expanded gambling -- a voluntary
tax, she said -- or leasing the state lottery's management.
Quinn maintained he's still focused on cutting spending and pledged
"the frills of government will go away," but acknowledged the budget
proposal will be painful.
"There will be some castor oil in it," Quinn said. "When you take
castor oil, you hopefully get better in the long run."
By JOHN O'CONNOR]
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