Should Illinois residents be happy or nervous? Governor Quinn and Illinois Democrats are acting like they take pension reform seriously. The Illinois Senate just followed the House by passing a bill that finally asks state retirees, including judges and legislators, to contribute towards their health care costs. Governor Quinn is talking up a plan for 2013 that would shift the costs of teachers’ pensions from the state to localities, cut retiree cost of living adjustments, increase public employee pension contribution rates, and raise the retirement age for the state’s public workers to 67.
Who could have imagined that a Democratic governor in irretrievably spendthrift Illinois (see: Live In Illinois? Get Out Now.) would not only broach constructive pension reform, but win favorable nods from both parties in Springfield and watchdogs like the Civic Federation? Was news that the state’s 2011 retroactive income tax hike funneled billions into the black hole of public pensions the last straw for residents, or was it the terrible prospects for Illinois businesses and anyone considering relocating to the state? Perhaps Illinois simply ran out of things to tax. Illinois may be the state to teach the nation that when things are bad enough, even Democrats can be responsible.
Illinois is in a unique position to show Washington how pain brings wisdom. The state is going to be broke for a very long time no matter what Governor Quinn does. Unfortunately, the learning curve is long and steep for the Obama White House and Democrats in Congress. They still have dreams of retaking Washington and freeing up more tax money from wealthy pocketbooks. Wealth through economic growth is an elusive concept for Barack Obama, so if he needs more money the only recourse is to go to whoever has some left.
Illinois may find itself in the sights of Washington Democrats desperate to secure the party’s future in November. How will Illinois pension reform play to a president determined to empower public employee unions? Arne Duncan is asking us to pay teachers more money even though localities are unable to bear the cost of their employees (see: Will Taxpayers Support Raising Teacher Salaries 165%?). With union and public employee support crucial to the election, and the Medicaid costs Governor Quinn is seeking to control on track to escalate with the Affordable Care Act, Washington is backing states into a fiscal corner no matter what they do to control their spending.
How bad do things have to get before Washington takes the hint, has a moment of clarity and decides to follow the example of bottomed-out states like Illinois? Will Illinois become the nation’s inspiration, a model of responsibility and a lesson in how pain can bring fiscal prudence? Ask the president. He came from Illinois when the gravy days were still celebrated in Springfield. That explains a lot, doesn’t it?