CHICAGO - A measure to overhaul Cook County's troubled pension system advanced in the Illinois legislature.
Even after Wednesday's narrow win, the state Supreme Court's recent pension ruling continues to cast a pall over the county's efforts.
The House Pension and Personnel Committee voted 5-4 to send Senate Bill 843, the county's pension reform bill, to the House floor.
Some committee members who supported the measure said they were uncertain if they would continue to do so in the full House, largely because of the Supreme Court's recent unequivocal ruling voiding the state's own pension reform.
"We all have serious questions," said state Rep. Michael Zalewski, D-Riverside, who voted in favor of sending the bill out of committee.
"If we send this bill to the court, I'm worried that an appellate or supreme court will come back with an even tighter ruling," he said. "I really worry about continuing to send the courts these frankly controversial bills."
The county is back in the legislature this year after its effort to obtain legislation to allow it to overhaul its pension system failed to gain enough support last year.
This year, County President Toni Preckwinkle faces an added degree of difficulty tied to the state Supreme Court's recent ruling that pensions are constitutionally protected.
County officials argue that its pension reform is urgently needed to stave off the kind of downgrades that have battered Chicago.
"Two of the three ratings agencies have our ratings under negative outlook," Cook Chief Financial Officer Ivan Samstein told members of the House Personnel and Pension Committee during a Wednesday morning hearing on the bill. "We were downgraded last summer, which we were worried about, and that continues to be the case." Samstein said another downgrade could cost the county $25 million a year "due to short-term debt instruments." The bill faces a tough battle as lawmakers continue to digest the state Supreme Court's recent ruling. Even the committee members who voted for the bill said they expect it to end up in the hands of the Supreme Court.
Chicago is dealing with a court challenge to its own pension reforms, which is expected to end up in the Supreme Court as soon as this fall.
A representative from American Federation of State County and Municipal Employees, one of the county's largest unions, testified at the hearing that the union would sue if the county's reform passed.
Like Chicago, Cook County argues that its pension reform is different enough from the state's to withstand a court challenge.
In part that's because the county and the city are not relying on the state's so-called police powers argument.
"Based on extensive research, we are of the position that this legislation is highly, highly tenable in a court of law even following the recent decision on SB 1 (the state pension reform)," county general counsel Joseph Clary told lawmakers.
Clary argued Cook's reform is legal because the county has always made its pension contributions; because employees and retirees will receive a benefit they are not currently offered; and because the reform will save the system from going broke.
That last argument - that the reform is constitutional because it will preserve pension funds that would otherwise end up insolvent - echoes Chicago's argument in its pension case.
"This is to save a system that is already on the border of insolvency," Clary said.
Committee chair Elaine Nekritz, D-Buffalo Grove, agreed that the county's legislation could survive a court challenge and added that the state might even be able to adopt some of the proposals.
"I've believed all along this bill was very different from SB 1," Nekritz said.
"I think getting this before the court and seeing if any of these legal arguments and different factual circumstances can stabilize the county is worth giving it a shot," she said.
"Maybe the state could maybe go down this path," Nekritz said. "It wouldn't provide us much relief but at this point any relief is better than none."
The county's main pension fund has a funded status of 54% with a $6.8 billion liability. That includes retiree health care obligations.
The reform would, among other things, allow the county to use revenue other than property taxes to fund the pensions.
Preckwinkle's proposal would raise the county's contribution by $147 million a year starting in 2016 and also raise employee contributions. It would retain the compounded nature of the cost-of-living increases while reducing the annual increases for current workers and freezing all COLAs for current retirees for one year in 2016.
The bill would boost the retirement age for most county employees by five years.
Samstein touted the proposal as having the approval of 67% of the county's unions, representing 61% of the unionized workforce.
"We spent two years working with stakeholders," he said. "The majority of our unions are and remain supportive, and our single largest unions actually undertook a floor vote and 68% supported it."
Preckwinkle has so far refused to provide details on how the county would pay for the proposal, saying only that it planned to be "very creative" about financing the increased contributions.
Moody's Investors Service rates Cook County A1 and Fitch Ratings, which downgraded it last July, rates it A-plus. Fitch and Moody's both have the county on negative outlook.
Standard & Poor's rates the county AA with a stable outlook.
