Southtown Star

Pension reform on some ballots

Tuesday, November 02, 2010

Every election, it seems there's something on the ballot that catches voters by surprise. This year it might well be an advisory referendum taking place in 44 municipalities statewide, including Orland Park and Palos Park.

The question reads, "Shall the Illinois General Assembly and Governor take immediate steps to implement meaningful public safety pension reform which will relieve the extensive burden on local taxpayers now that the General Assembly and Governor have reformed the pension systems of all other public employees?"

My guess is that about 90 percent of the people casting ballots will vote "yes," which is what happened in Lake Forest and Barrington, two suburbs where the referendum already has appeared.

The measure is being pushed by the Illinois Municipal League and other groups representing suburban mayors and village managers throughout Illinois.

It turns out the Legislature sets the rules for police and fire pension systems even though local governments pay the cost.

Police and firefighters can retire at 50 and begin getting benefits, with the maximum benefit at 75 percent after 30 years of service. Upon retirement, the pension benefits increase by 3 percent each year, beginning at age 55.

Police and firefighters contribute 9.91 percent and 9.455 percent of their pay, respectively, toward their pensions. They have no FICA deductions, and therefore do not qualify for Social Security.

Officials in Orland Park recently passed a resolution claiming that the village's contribution to the police pension fund increased by more than 50 percent from 2007 to 2009, or by $577,217. The village's total property tax levy in 2009 for that purpose was $1.7 million.

In some communities, the required pension contributions are forcing them to cut, or threaten to cut, police and firefighters, as they dig into their operating revenue to come up with the required payments.

Mark Fowler, executive director of the Northwest Municipal Conference, which is helping spearhead the effort to reform public safety pensions, said the initial goal is to pass a law affecting only the pensions of police and firefighters who are yet to be hired.

However, he said, financial realities might force suburbs to reduce the pension benefits of police and firefighters now working. At the very least, the mayors would like to increase the retirement age to 60 from 50.

I don't know how much sense it makes to keep firefighters working until they're 60, although the job is obviously less stressful in many suburbs than it might be in Chicago.

As I said, this is an advisory referendum, so it won't become law just because voters say it should.

"We're hoping to demonstrate to state legislators that there is a lot of public support out there for pension reform for police and firefighters," Fowler said.

Pat Devaney, president of the Associated Fire Fighters of Illinois, which represents roughly 15,000 firefighters and 206 locals, said his membership is supporting a "yes" vote on the referendum.

Devaney explained that his organization almost reached an agreement with the mayors on reforms during the last legislative session except for one sticking point.

"We wanted all municipalities to become compliant (with their pension-contribution levels) by 2015, and we were rejected," he said.

His contention is that benefits are not creating the problem - it's the lack of full funding by towns that have delayed making their payments.

The fact is that after the Great Recession, the people who financially support the pension system, middle-class voters, no longer have the financial wherewithal to keep it solvent.
So cuts are going to be made.

What surprises me is how enthusiastic average folks seem to be to cut the pensions of the people who work for them in government jobs.

I realize that compared to the rest of us, these people seem to have a sweet deal. As people like to point out, many employees in the private sector don't get pensions any more.

But that makes me wonder what happens down the road when people can't afford to retire.

Those people with good pensions spend money. They provide a boost to the economy. And that creates jobs.

There have always been poor and rich people in this world. What made the American economy different, what made it great, it seems to me, was the creation of a middle class that could spend on homes, cars, ovens, refrigerators, TV sets, cell phones, college tuition, etc.

As employee wages get cut, as pensions and benefits disappear, people are going to be saving more just to pay their living expenses. And that means they're going to keep spending less.

The logical conclusion is that the economy no longer grows.
Government pensions will have to be cut, but I can't figure out why anyone thinks that's a reason to celebrate.