Could the answer to Illinois’ pension woes come from Washington, D.C., rather than Springfield?
The Illinois Constitution protects state workers’ pensions from being diminished. This has kept Republicans and Democrats alike from reforming pensions and reducing the state’s $111 billion unfunded pension liability.
Diana Furchtgott-Roth, an economist at the Manhattan Institute, said Congress could change that with a tweak to federal tax laws that would trump the provisions in the Illinois Constitution.
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“It’s very important to give states the tools to fix their own pensions,” Furchtgott-Roth, a former chief economist at the Department of Labor, said. “What this would do is empower states to solve their own problems. This is not a bailout, but an anti-bailout act.”
Furchtgott-Roth said if Congress had adopted her proposal, it could have enabled then-Gov. Pat Quinn’s 2013 pension reform laws to withstand a court challenge.
When asked about the premise, U.S. Rep. Bob Dold, a Republican from Kenilworth, said he would look at at a possible solution to Illinois’ pension problem that didn’t solve itself on the backs of the state’s school children.
Furchtgott-Roth said that under her proposal, Illinois’ pension obligations could be altered if the governor could prove that the pension liabilities are harming essential state services.