Our Opinion: Lawmakers hit new low in irresponsibility
Tuesday, May 11, 2010
IT'S A GOOD THING Illinois legislators blew out of town on Friday without passing a state budget because the options they produced were the worst yet in what is now a seven-year fiscal debacle.
Illinois lawmakers should use the 21 days they have until May 31, when a three-fifths majority will be required to pass a budget, or, if it becomes necessary, the 51 days until the start of the new fiscal year, to inject a modicum of responsibility into next year’s budget.
TO TRULY DO SO, they have to start by making the state’s pension payment on time.
By far the most terrible feature of the budget plan was that it gave Gov. Pat Quinn permission to delay paying $3.6 billion that the state owes to the pension systems during the next fiscal year. That measure became necessary because of the dysfunction and partisan infighting in the Illinois House and craven political maneuvering by Sen. Bill Brady of Bloomington, the Republican gubernatorial candidate.
BECAUSE OF THE state’s dismal revenue situation, Democrats proposed borrowing the $3.6 billion to make the payment. But Brady balked and urged House Republicans to withhold their votes, which were necessary because borrowing money requires 71 votes and House Democrats have only 70. The Senate, where Democrats have a supermajority, approved the borrowing plan.
Borrowing money to pay pensions is irresponsible. Not borrowing it and delaying or skipping the payment reaches a whole new level of negligence and carelessness. Here’s why:
* Delaying or skipping the payment means the pension systems lose out on the compounding interest that would have accrued had the money been invested. Analysts quoted by the Chicago Tribune said the cost of a delay over the next 35 years would be $37 billion.
* Borrowing the money would cost much less: $3.6 billion — the principal amount — plus hundreds of millions of dollars in interest payments.
* The pension systems will have to liquidate up to $200 million of their assets to pay retirees, according to William Atwood, executive director of the Illinois State Board of Investment, further deepening Illinois’ worst-in-the-nation pension debt.
THE COST-BENEFIT analysis is simple. But Brady, all 48 House Republicans and the 11 House Democrats who didn’t support the borrowing decided their political careers were more important than any duty they have to their fellow taxpayers.
Brady and House Republicans argue that the money simply should be cut from the budget and that the state should make the payment without borrowing. They point to various GOP proposals being held up in the House Rules Committee or bills that have been killed in the Senate.
HOUSE SPEAKER Michael Madigan, D-Chicago, announced on the floor Friday that he would entertain any and all budget-cutting amendments.
While the move was a brazen attempt at political entrapment after Madigan spent four months mostly ignoring Republican ideas, it’s also an opportunity. Brady and the Republicans should offer a comprehensive and complete alternative budget. They should show Illinois, as New Jersey’s Republican governor, Chris Christie, has done, exactly how they would start to close Illinois’ $13 billion deficit without borrowing or raising taxes.
Perhaps if they work together for a change, Republicans and Democrats can agree on a compromise that cuts enough money so that borrowing the entire $3.6 billion pension payment is not necessary.