Gambling expansion in the Senate and pension reform in the House of Representatives were the headliners as the final scheduled month of the 2013 regular legislative session got under way during the first week of May.
On May 1, I hosted an interactive Teleforum to give 25th Senate District residents the opportunity to talk with me about state issues.
I appreciate the participation of nearly 4,000 people, who listened and offered insight into the issues facing us in Springfield. I will admit some of the responses to our poll questions were surprising:
• With the strongest response, 83% of respondents said government needs to cut spending and reduce the tax burden while 17% said government should spend money to help create jobs.
• 73% said Illinois should not expand the state’s sales tax to services like haircuts, computers consulting and car repairs while 27% said we should tax services.
• 73% said Illinois should allow the 2011 income tax increase to expire in 2015, as promised, even if it means cutting programs while 20% said we should extend the income tax increase and 7% said we should raise taxes higher because the state needs more revenue.
• 65% said government pensions should be moved to a defined-contribution plan, which is more like pensions used in private businesses, instead of the current defined-benefit system while 35% did not support such a change.
• 62% said Illinois should legalize medicinal marijuana use for chronically or terminally ill patients; while 38% said “no.”
Thank you to all who participated.
The Senate kicked things off early in the week with a “subject matter only” hearing before the Senate’s Executive Committee April 30 on pension reform that allowed Senators to voice their proposals; however, the committee did not advance any specific measure.
With Illinois facing a state employee public pension unfunded liability estimated at $100 billion, I offered a pension reform plan (Senate Bill 2026) that would reduce that liability by nearly $50 billion.
Most of you probably know that I have had some background in making ice cream – I am Chairman of Oberweis Dairy, a business founded by my grandfather. However, I spent most of my working career in the financial services business, starting Oberweis Asset Management which today manages nearly $1 billion in pension assets. I also serve on the Moose International Pension Investment Committee.
An initiative of the Illinois Policy Institute, Senate Bill 2026 would:
• Reduce Illinois’ unfunded liability immediately by almost 50 percent;
• Provide that our pension systems would be 100 percent fully funded by 2045;
• Reduce annual pension payments by $2 billion a year, freeing up money for priorities such as education, human services and public safety;
• Protect all earned defined benefits, but would suspend COLAs;
• End defined-benefit plans for future employees and replace them with defined-contribution plans.
Going forward, current employees would have a defined contribution plan similar to a 401k plan. Current employees would contribute 8 percent of their earnings, and the employer would contribute 7 percent. This is only bill I am aware of that would prevent our underfunding situation from ever occurring again (by ending future defined-benefit plans).
On May 2, the House approved and sent back to the Senate a heavily-amended Senate Bill 1, which replaced all of the bill’s original language with a pension reform proposal crafted by the House Speaker that incorporates a number of ideas floated by Republicans and Democrats over the past several months.
The House-approved measure promises savings of about $150 billion over 30 years, including about $2 billion by 2015. The savings come largely from reducing retired teachers’ and other employees’ pension cost-of-living increases.
The bill faces an uncertain future in the Senate. The changes were grafted onto a bill sponsored by the Senate President, who has passionately argued that unilateral cuts in benefits cannot survive a constitutional challenge.
Key changes contained in Senate Bill 1, as approved by the House, include:
• Higher retirement age for employees currently younger than 45;
• Reduced cost-of-living adjustments (COLAs) on pension benefits;
• COLAs delayed until either age 67 or five years after retirement, whichever comes first.
• A cap on the salary that is eligible for pensions. The cap would be $109,971 and would be increased at half the rate of inflation each year.
• Employees would be required to pay an extra 2% of their salaries into the pension fund.
• To guarantee funding, the various pension systems could sue the state to enforce payment.
On May 1, the Executive Committee did advance a major expansion of gambling in Illinois, including a Chicago-based casino. Senate Bill 1739 was sent to the Senate floor, where it was approved by a 32-20. I voted against Senate Bill 1739.
In addition to a Chicago-based casino that would be allowed up to 4,000 gambling positions, Senate Bill 1739 allows for four new riverboats or casinos, slot machines at Illinois racetracks, and a major increase in the number of gambling positions allowed at existing riverboats. The four new riverboats or casinos would be in Rockford, Danville, Lake County and Southern Cook County.
In other action, Senators began committee reviews of legislation sent from the House. A handful of other measures were also sent from the Senate to the House for consideration, including my bill to allow 70 mile-per-hour traffic on Interstate highways. The Senate Republican Caucus Web site contains a complete listing of Senate action.