The alternative is a future in which core services are cut, taxes are raised and pensioners risk losing what they’ve already been promised as the funds go insolvent.
Pensions are crowding out core government services, with state pension costs already exceeding 25 percent of general revenue expenditures. This had lead to calls for damaging tax hikes.
If tax hikes are off the table as a solution to this problem – as they should be given Illinois’ weak economy and already-painful total tax burden – lawmakers’ only remaining options are to structurally reform pensions so that they are in line with what taxpayers can afford going forward.
To achieve balanced budgets and a strong credit rating – without gutting core services or crushing the state’s economy with more tax hikes – Illinois must amend its pension clause to make clear that while already-earned benefits are protected, future increases in those benefits are subject to change to bring them in line with what taxpayers can afford.
A constitutional amendment would allow the following commonsense pension reforms, based on the bipartisan 2013 agreement passed by the Illinois General Assembly that was later struck down by the Illinois Supreme Court:
- Increasing the retirement age for younger workers
- Capping maximum pensionable salaries
- Replacing permanent compounding benefit increases with true cost-of-living adjustments, or COLAs
- Implementing COLA holidays to allow inflation to catch up to past benefit increases
Reforming future pension benefits growth through a constitutional amendment is the only way to ensure the retirement security of government workers, protect taxpayer budgets and provide core services to Illinoisans.