(MCT) SPRINGFIELD, Ill. — Gov. Pat Quinn chastised lawmakers for failing to pass cost-cutting changes to the government worker retirement system, then dangled the possibility that he'd drop his long-running opposition to a major gambling expansion to get a pension deal done.
The prospect of signing off on a casino for Chicago and four other cities is a new wrinkle for the governor, who has failed for more than a year to win pension reforms and faces a potentially tough re-election next year. But the notion of a grand bargain on pensions and gambling was greeted cautiously by lawmakers who have watched Quinn veto two gambling bills, including one on Monday.
The stick-and-carrot approach came during a Wednesday budget address in which Quinn warned that increasing pension costs continue to divert money from "core" services such as education and health care.
Quinn talked in broad terms of the "tough pill" his spending plan represents, steering away from specifics that include what lawmakers say is a $370 million cut in support to elementary and high schools that would mark the third consecutive education funding reduction.
"Today our budget is being squeezed more than ever," said Quinn, who last year launched an ill-fated grass-roots effort to generate public support for pension reforms featuring a cartoon character named Squeezy the Pension Python.
"If I could issue an executive order to resolve the pension crisis, I would. And I would have done it a long time ago. But democracy requires action by the executive branch and the legislative branch. It's time for you to legislate," said Quinn, who also asked lawmakers, "What are you waiting for?" on approving reforms to the vastly underfunded retirement system.
The governor, who has frequently changed what he backs in a pension bill, this time called for passage of a "comprehensive" measure that includes unspecified changes to the annual compounded interest cost-of-living adjustments that help drive up the pension debt and a suspension of the yearly increases for "those with higher pensions." The administration declined to define a dollar amount, however.
Quinn also said he wants a guarantee that the state would make its annual pension payments, to dedicate future revenues now earmarked for loan payments to pay down the pension liability, to require workers to pay more toward their retirement and to not ask more of "our taxpayers to repair the pension problem."
While lawmakers and Quinn spent the past year talking about the need for reform, costs continued to rise, taking up about 20 percent of general funds. The state must now pay an additional $929 million to make the annual pension payment — from $5.1 billion in the current budget year to $6 billion under the new spending plan proposed by Quinn. The increased pension cost alone far outweighs the extra $817 million in revenue the state is expected to bring in, according to the administration. And those figures don't even include $1 billion the state is setting aside to whittle down previous pension loans.
Quinn also said he was open to gambling expansion as a way to bring in more money for pensions, but only if it was "done right," including tough ethical standards, a ban on casino campaign contributions "and no loopholes for mobsters." That last condition drew some stifled laughter from lawmakers — the only interruption during Quinn's address other than an early reference to the death Tuesday of Democratic icon Dawn Clark Netsch, which drew a standing ovation.
"The state of Illinois, as employer, should also consider additional revenue solutions to break the gridlock," Quinn said. "For example, any enhancement that we enact to gaming revenues this year should be dedicated to education, which could include teachers' pensions."
A mere year from now, Quinn faces a potentially tough primary challenge, and resolving the intractable, budget-gobbling pension issue, even if it involved a gambling deal, could be a good line on his leadership resume.
Rep. Lou Lang, the Skokie Democrat pushing gambling expansion, said he was "not opposed" to dedicating some new gambling revenue to teacher pensions. But, Lang said, the state has "lots of needs" and could use that money to pay for construction projects, overdue bills or education.
Quinn didn't have to wait to get a glimpse of what lawmakers have in mind for a new gambling package. Just hours after his speech, a Senate committee advanced legislation to add five casinos and allow slot machines at horse racing tracks and Chicago airports.
Supporters said the proposal could generate as much as $400 million a year for education, though Quinn has previously opposed slots at tracks and airports. The bill also would create a new regulatory body to oversee Internet-based gambling, with the hope of generating at least $50 million a year that could be put into the pension system. Gambling interests would be banned from making campaign contributions and a gambling inspector general would be added under a bill sponsored by Sen. Terry Link, D-Waukegan.
Senate President John Cullerton saw Quinn's gambling gambit as a possible breakthrough.
"I believe that a gaming plan that is structured to address the ethical and regulatory concerns of Gov. Quinn can be part of a new revenue mix," Cullerton said.
House Speaker Michael Madigan, the Southwest Side lawmaker who is the state's most powerful Democrat, credited Quinn with issuing "a very strong challenge to the Legislature."
Madigan told public television's "Illinois Lawmakers" that he intended to continue offering proposed pension reforms piecemeal "over the next several weeks" to help lawmakers "better understand how grave the situation is."
But Madigan's top lieutenant, House Majority Leader Barbara Flynn Currie, D-Chicago, said Quinn didn't necessarily move the ball forward on pension reform.
"I don't suppose the lawmakers suddenly said, 'Gee, oh, the light has hit, the bulb has gone off in my head. It's time to get serious,'" Currie said. "But I do think we have been moving toward becoming more serious over time."
Rather than accept Quinn's criticism of inaction, Senate Republican leader Christine Radogno, of Lemont, tossed it back at the governor.
"I think most of the work that has been done on pensions has come out of the General Assembly and not out of the governor's office," she said. "The governor is the one that has been woefully absent."
The state's public employee and teacher unions responded to Quinn's pension remarks by contending that the governor was offering "a false choice" between funding retirement benefits or cutting education.
"Springfield lawmakers created the massive pension debt by skipping payments and borrowing more," said Dan Montgomery, president of the Illinois Federation of Teachers. "To call that debt an education expense is not only a gimmick, but an insult to teachers everywhere. We are not to blame, and our students shouldn't suffer."
Quinn also suggested suspending what he called business tax loopholes that would have generated $445 million this budget year. One would result in taxing foreign dividends earned by some corporations. Another would end a tax break for products made out of state.
The new money would help pay down the state's near $10 billion backlog of overdue bills to providers of state services, but the approach has failed to gain traction in the past.
"Why should we give costly, ineffective loopholes to some of the biggest and most profitable corporations on Earth when we have bills to pay?" Quinn asked.
Quinn also wants to reduce the amount of money cities and transit agencies receive from the state. Under current law, that money increases each year without review. He wants to stop that and roll back spending to 2012 levels, which would amount to a $241.2 million cut.
Even before he began his speech, Quinn found himself at odds with the Democratic-run Legislature.
Quinn's general fund budget plan would spend $35.6 billion from July of this year until next. A day earlier, House Democrats and Republicans set a spending limit of just less than $35.1 billion — a difference of about $500 million. The current operating budget is $34.4 billion.
Madigan warned that lawmakers were unlikely to go beyond the spending limits, raising questions about whether they would set aside enough money to give pay increases to state union workers as required under a tentative agreement struck with Quinn's office late last week.
"My expectation is that the budget-makers in the House and in the Senate will instruct the state agencies: 'You get X amount of appropriation, now you work through that amount of money and decide whether you want to do pay raises or lay off workers,'" Madigan said.
Rep. Elaine Nekritz, the Northbrook Democrat who has served as a lead House negotiator on pension reforms, said Quinn's finger-pointing speech wasn't helpful.
"Let's just move ahead and get something done," she said.
Tribune reporters Rick Pearson and Rafael Guerrero contributed.
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