By: Mark Glennon*
Illinois Sen. Christine Radogno (R-Lemont) took the lead with Senate President John Cullerton (D-Chicago) to negotiate the “grand bargain” budget proposal for Illinois now being widely discussed. Let’s review her record. I’ve spoken before several times to Radogno about the primary budget issue for Illinois — pensions. It was clear to me that she simply doesn’t know what she’s doing. It was strike 3. Let’s look at just two strikes against her already on the record.
Strike 1 was the blatantly foolish or dishonest claim she made about SB-1, the last major attempt at state pension reform. The courts struck it down. Radogno was emphatic that, if upheld, it would have fixed our pension problem entirely and taken them to being 100% properly funded. SB-1 would “stabilize the state’s finances,” she said. “This solves the problem. It really does.”
That was blithering nonsense. Even if SB-1 had been upheld, state pensions would be in far worse shape today than when the bill was drafted. Details on those numbers are linked here. And that’s not using hindsight: It was readily apparent at the time that SB-1 could not have fixed much, as we wrote here a few months after the bill was passed.
Also respecting SB-1, she vehemently attributed Republican opposition to the infamous “guaranty” provisions in the bill to political grandstanding in the then upcoming governor’s election. That in itself was cause to wonder which side she’s on. In fact, objections to the guaranty arose as soon as drafts of them first appeared — we, too, screamed about it here — before the race for governor took shape and candidates announced.
Strike 2 for Radogno was her utterly false claim made consistently about the Tier 2 pension reforms. Those reforms, made in 2010, put new hires into a junior class with lower benefits and higher contributions. Radogno likes to say that Tier 2 alone pretty much solves the pension crisis. She wrote just that in 2014, saying the pension system as a whole is projected to return to 90% funding “generally due to recent reforms that established benefit changes for newly hired employees.”
That’s just plain nutty. The unfunded pension liabilities are owed entirely to Tier 1 members for work already performed. Though Tier 2 members are forced to help subsidize that liability, that subsidy is already reflected in the estimates you always read about for the unfunded liabilty, which is officially $130 billion today. Details on this particular bit of nonsense from Radogno are linked here.
Yet Radogno decided she has the credibility and competence to negotiate an extraordinarily complicated grand bargain with one the most cunning politicians around, John Cullerton. Sure, Cullerton is deceitful, malevolent and interested only in protecting public unions and their pensions, but make no mistake: He’s smart. I’ve talked to him, too, several times in the past about our problems and pensions. He knows the numbers and he knows how to protect union pensioners, especially those in Chicago.
The result was predictable. Cullerton ate Radogno for lunch.
Under their proposal, all Illinoisans would take on going-forward costs of the Chicago teachers’ pension. The personal income tax rate would increase from 3.75% to 4.95%. About $700 million would be collected through a new sugar tax. The corporate income tax would increase from 5.25% to 7%. The “consideration” approach to pension reform would be tried, which is a blatant gimmick — fake policy. If it survived a court challenge (and Cullerton probably figures it would be invalidated), it supposedly would save about $1 billion per year, but that’s not much compared to the problem and nobody has ever documented the $1 billion.
The proposal does have potentially good elements. Property taxes would be frozen for two years, though we need to see what holes are in it. Workers’ comp would be reformed, but details are very sketchy. Government consolidation would be made easier, but to what extent is unknown. The pension for legislators would end, though it’s tiny. But the positive elements of the deal, even if drafted well, wouldn’t convince people and employers that the tax increases aren’t another reason to flee.
It contains many other exceptionally complex provisions, yet Radogno and Cullerton intend to cram this through the Senate early next week. You can be certain nobody in the Senate will have time to understand what’s in it by then. Except Cullerton.
Adding insult to injury, Cullerton was on WTTW tonight assuring everybody this would balance the budget. No, the real deficit is several times the deficit commonly reported and used by Cullerton.
The package faces an uncertain future in the Illinois House and Governor Rauner has not clearly taken a position.
Greg Baise from the Illinois Manufacturers’ Association said it perfectly: “This is a typical Illinois solution… All they’re doing is trying to find money and not do anything on the business side to help us compete with our Midwestern neighbors.”
It’s time for Christine Radogno to go away. Or change parties.
*Mark Glennon is founder of Wirepoints. Opinions expressed are his own.