THE ISSUE: Rauner faces $9B shortfall in presenting budget plan
OUR VIEW: Pension crisis should be leading focus of campaign season
Republicans cheered Wednesday as Gov. Bruce Rauner delivered his annual budget address, specifically during the part where he outlined the steps necessary to cut taxes on Illinoisans by $1 billion.
The proposal wasn’t surprising, as reducing tax burden is a longstanding Republican principal, and Rauner himself has been crystal clear in his plan to stimulate the state’s economy by reducing the amount the average person sends to Springfield while also lowering the cost of doing business, such as by reducing the amount of money workers can get if they’re injured on the job.
A key aspect of Rauner’s budget proposal was shifting the cost of retiree pensions away from the state and back onto the taxing bodies who employed those people in the first place. This would have the largest effect on the academic community, as the Teacher Retirement System manages retirement benefits for every public school worker in Illinois outside of Chicago.
Predictably — during the speech even — came the pushback from Democrats who correctly noted that while cost shifting would have a dramatic and positive impact on the state’s spending obligation, the local school districts that would have to increase the amount they spend on pensions are likely to turn to property tax increases or program reductions to bridge the gap. And in that likely outcome, the end result is the same: the taxpayer foots the bill, albeit through a different line item.
Stop us if you’ve heard this one before, but the song remains the same. All these retirement benefits were dutifully negotiated with labor unions at the time, and working people planned their lives accordingly. Whether it was a good idea for the state to offer to foot its share of the bill is certainly up for discussion, but it’s also in the past. The money was promised, and breaking that promise will not be simple.
We agree with Rauner the expenses are a serious burden on state government. But he’s failed to make his case that the state is entitled to ease that burden by forcing local governments to pick up the slack. It’s especially incongruous to hear such proposals from someone who laments the amount of money Illinoisans pay in property taxes, both in raw dollars and expressed as a percentage of a home’s market value.
In other words, Rauner’s proposal does nothing to address the actual cost of meeting the obligations negotiated in these retirement plans, it only shifts responsibility. It’s like a doctor saying they’re not qualified to treat a patient’s cancer — that may well be true, but it doesn’t remove the tumor.
Shortly after the speech ended, he tweeted thoughts addressing this concern, writing: “To be clear, shift of pension expense to schools comes with tools to reduce costs and property taxes. It's key to our proposal to give people control of their own local spending.”
We hope that’s true, though we remain mindful that reducing costs almost certainly means reducing promised benefits. If a solution were simple, or even mildly difficult, it would have been reached long ago. The problems are not new.
That said, we very much agree with Rauner’s mindset as it relates to future decisions. In his address, he advocated for shifting “costs closer to home, so people can question expenses and deal with them more directly. When they are responsible for paying the bills, there will be plenty of incentive to lower costs.”
We are long overdue for a fundamental shift in the way Illinois taxes and spends, and welcome bold proposals for phasing out old approaches and introducing modern alternatives. There will always be political disagreements over the role and size of government, and those will be especially stark as we enter yet another campaign season.
So the stage is set: Rauner has outlined a vision, he will face heavy opposition in the Legislature. He’s also facing a study primary challenger at least until Tuesday, March 20, and after that is either officially a lame duck or embroiled in a general election campaign that will last the entirety of the legislative session.
What the state needs is compromise and common sense, but the short-term forecast is for more conflict. You may not agree with Rauner’s ideas about solving the pension problem, but at least he has put those cards on the table. Anyone else who aspires to his job needs to clearly outline their own proposals, because real reform isn’t possible unless this problem is addressed in full.