Speaker Madigan’s Corruption Nurtured Illinois’ Pension Debt

Corrupt politicians. Public pension debt. In Illinois, both of those phrases are redundant.

Standing at the crossroads of those shameful bits of local lingo is one man: Illinois House Speaker Mike Madigan.

Madigan’s corruption could no longer be ignored when he was implicated in the federal bribery case against utility giant Commonwealth Edison. 

His guilt in building the state’s economic collapse requires a longer look.

Madigan is the longest-serving statehouse speaker in U.S. history, starting in 1983. Since 1998, he’s also been the chairman of the Democratic Party of Illinois. Those dual roles let Madigan accumulate more concentrated power over public policy than any state leader in the country. 

For more than three decades, Madigan has been at the center of virtually every bad decision that gave Illinois its soaring debt and crashing credit. 

In 1980, Illinois had just $4.5 billion of pension debt and top-rated AAA credit. Today it has the nation’s worst pension crisis with nearly $140 billion in unfunded liabilities and the nation’s lowest credit rating, just one notch above junk status.

Many politicians share the blame, but Madigan has been the constant. He sponsored the major legislation or allowed the bad bills to pass. Madigan owns Illinois’ failing finances. 

Even before he was speaker, Madigan was part of Illinois’ foundational mistake on pensions. 

Madigan was a delegate to the 1970 constitutional convention. He voted for the pension clause that states government retirement benefits cannot be “diminished or impaired.” Based on that clause, the Illinois Supreme Court overturned pension reform in 2015 and stated it prevents any effective pension reforms unless the Illinois Constitution is amended to nullify it. 

Since then, Madigan’s majority has repeatedly doled out unaffordable but politically advantageous retirement perks the clause permanently locked in place. The speaker and his allies hid the costs from taxpayers and pushed off the day of reckoning with dangerous pension funding games and debt. 

Madigan was a House sponsor of Senate Bill 95 in 1989. That legislation created the 3% compounding retiree raises that Moody’s Investors Service said was “key to the growth in the state’s net pension liabilities.” It also gave politicians new ways to spike their pensions, adding $41,000 annually to the pension of state Sen. Emil Jones, its Senate sponsor.

Politicians and government unions receiving these benefits are key Madigan allies, with the latter putting $10 million during the past 26 years into campaign committees run by the speaker.

Public policy gains appear to motivate Madigan less than a drive to grow and maintain his own power. Illinois saw that in 1994, when Madigan surprised the Democratic candidate for governor, Dawn Clark Netsch, by publicly backing the pension funding plan of her Republican rival, then-Gov. Jim Edgar.

Netsch had planned to use inaction on pensions against Edgar. Madigan, who had endorsed Netsch’s opponent in the primary, was trying to shore up union support in an ultimately unsuccessful attempt to protect his majority from a Republican wave. Those two years were the only gap in his speakership.

For Madigan, it’s not about people. It isn’t about the party. It’s about power.

While Madigan and Edgar both wanted to demonstrate action on pensions, the “Edgar ramp” that took effect in 1996 was really a big can-kick that lowered pension costs during Edgar’s term but backloaded and raised them for his successors. It also violated standards set by actuaries by targeting 90% funding instead of 100% and by doing it over a too-long, 50-year period.

Madigan then sponsored an early retirement program in 2002 that allowed more than 11,000 state employees to retire as early as age 50 with full benefits. It cost taxpayers $2.3 billion. One year later, he supported former Gov. Rod Blagojevich’s plan to sell $10 billion in pension bond debt. The phony balance-sheet improvement those bonds created was used to justify $1 billion pension payment holidays in 2006 and 2007, supported by both Madigan and top government unions.

The speaker did support an attempt at pension reform in 2013, but since the Supreme Court blocked that effort in 2015, Madigan has used his procedural powers to prevent debate on a constitutional amendment that would enable 2013-style reforms. House rules give the speaker sole authority to decide when or whether legislation gets called for a vote.

Whenever Madigan does leave his seat of power, many frustrated Illinoisans will breathe a sigh of relief. That will also be the time to begin the hard work of undoing Madigan’s dual legacies of corruption and debt.

Two places to start are amending the Illinois Constitution’s pension clause and replacing the House rules that Madigan used to craft Illinois’ infamous culture of corruption and pit of debt.

These reforms would prevent another Madigan-style ruler. They would allow long overdue financial solutions to take root in Springfield. They are Illinois’ best hope to rewrite its lexicon: detaching politicians from corruption; unhooking pensions from debt. 

Adam Schuster is director of budget and tax research at the Illinois Policy Institute, a nonpartisan research organization that promotes responsible government and free market principles.

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