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Legislative update: Gov. Quinn to create panel to suggest legislative fixes for pension system

January 17, 2012
Lori Clark

Lori Clark

Happy New Year, and welcome back to campus. This should prove to be a very interesting year at both the state and federal levels.

In Washington, D.C. …

Congress has been on holiday recess since mid-December, returning to session this week.

Congress did approve the remaining FY2012 appropriations bills Dec. 15, 2011, which comply with the discretionary spending caps set in the August debt limit deal. The issues of extending the payroll tax, Medicare and Social Security, left unresolved before Congress adjourned, are expected to continue to be debated this year.

With the election cycle in full swing, few expect to see much in the way of substantive legislation reach the president’s desk.

According to Politico, “There is a brief window to pass legislation this year – in order to clean up the mess left over from last year. And the major deal-cutting may wait until the elections are over and for the end-of-the-year lame-duck session, since both the expiration of the Bush-era tax cuts and a $1.2 trillion in automatic cuts to defense and other programs will take place in January 2013 if Congress does not act.”

More than likely, we will see the partisan gamesmanship continuing, with each side trying to make the other look bad to gain advantage in the polls.

Early this year, the U.S. Department of Commerce, as mandated under the America COMPETES Reauthorization, released a new report, The Competitiveness and Innovative Capacity of the United States.

According to the Commerce statement, the report makes three important findings:

  • Federal investments in research, education, and infrastructure were critical building blocks for American economic competitiveness, business expansion and job creation in the last century;
  • Failures to properly invest in, and have comprehensive strategies for, those areas have eroded America’s competitive position; and,
  • In a constrained budgetary environment, prioritizing support for these pillars is imperative for America’s economic future and provide a strong return on investment for the U.S. taxpayer.

On Thursday, Jan. 12, President Obama announced his intention to ask Congress for the authority to reorganize and consolidate government to provide more effective, efficient services to the American people.

First on his list is his intention to organize all of the business and trade-related functions into a new department.

Currently, there are six major departments and agencies that focus primarily on business and trade in the federal government, including the U.S. Department of Commerce’s core business and trade functions, the Small Business Administration, the Office of the U.S. Trade Representative, the Export-Import Bank, the Overseas Private Investment Corporation, and the Trade and Development Agency.

In Springfield …

Illinois Gov. Pat Quinn

Illinois Gov. Pat Quinn

The Illinois General Assembly also has been on holiday break, and they will return Tuesday, Jan. 31, for three days.

The governor’s State of the State message is scheduled for Wednesday, Feb. 1.

On Thursday, Jan. 5, Gov. Pat Quinn signed House Bill 3813 into law (now Public Act 97-0651). This is one of the pension reform bills that is intended to close some loopholes in the existing pension systems that have permitted mainly city of Chicago employees to retire with a city pension that was based on a much higher union salary.

Gov. Quinn now has stated publicly that it is time to reform the public employee pension system “once and for all” this spring.

He announced that he is creating a panel that will be charged with recommending a legislative fix for the pension systems. He asked the General Assembly leadership to appoint members to this panel.

The following legislative members have been appointed: Sens. Michael Noland and Bill Brady, and Reps. Elaine Nekritz and Darlene Senger. The governor has tasked his former chief of staff, Jerry Stermer, with staffing this panel.

Reflecting our troubled fiscal condition, Illinois had its general obligation bond rating reduced by Moody’s Investor Service from A2 to A1, giving us the dubious distinction of being the company’s lowest-graded U.S. state.

In taking this action, Moody’s cited Illinois weak management practices, no lasting solutions to its severe pension underfunding or to its chronic bill payment delays as reasons for the downgrade.

This makes it more expensive for Illinois to issue bonds, although Illinois did issue some general obligation bonds last week at a 3.9 percent interest rate, beating every published expectation. There continues to be concern that other bond rating services also will downgrade Illinois’ ratings.

The governor’s office also has been conducting a series of “closed” meetings regarding future state mental health facility closures, with AFSCME accusing the administration of holding secret meetings. Quinn’s office has responded that it is meeting with advocates and experts in the field, as well as with members of the General Assembly, to look at how to transition individuals back in to the community should a facility be closed.

You will recall that last year, the governor announced the closure of a number of mental health and correctional facilities. While the General Assembly eventually provided funding to keep these facilities open for this fiscal year, the governor has consistently maintained that facilities will need to be closed in the future.

The Voices section of NIU Today features opinions and perspectives from across campus. Lori Clark is director of State and Federal Relations for NIU.