As a sweeping restructuring of the public transit systems in the Chicago area neared an up-or-down vote last week, it was loaded with enough new revenue ideas to fill a progressive’s wish list.
A “billionaire’s tax” on realized investment gains? Check. Expanded real estate transfer taxes? Those, too. Taxes on delivery services and concert tickets, a congestion tax and a ride-share tax? Of course.
The Tribune’s editorial board reacted with dismay and called for them to scrapped.
And so they were — for more than one reason.
For starters, the so-called fiscal cliff the Regional Transportation Authority warned about in May turned out to be smaller than advertised. Instead of a looming $770 million deficit, as projected, a revised estimate of next year’s projected deficit came in at around $200 million as final-round negotiations approached this fall.
This removed the urgent temptation to test every possible revenue source in order to close the gap. And as legislative talks approached the end point last week, Gov. JB Pritzker stepped up to describe just what sort of measures he would not endorse.
“They sprung a whole bunch of things that have never been seen before,” Pritzker observed during a news conference in downstate Taylorville. And this was not meant as a compliment about legislative creativity. Rather, it was a warning from Pritzker that the legislative brainstorming had gone too far.
Pritzker specifically singled out the tax on unrealized investment gains as an unproven, untested idea.
Lawmakers who worked for months alongside Pritzker’s deputies and a host of other negotiators groused at Pritzker’s last-minute interjection, just days before the fall legislative session closed. But in the end, the unbounded new revenue ideas got squeezed out of the bill, leading to a comparatively mainstream $1.5 billion transit bailout plan that awaits Pritzker’s signature.
Instead of grabbing stray revenue from every which source, whether transit-related or not, as the original House bill proposed, the bill that passed would fill the transit revenue gap primarily from transit-related sources: higher road tolls and fuel taxes and interest earned by the state’s road fund, for example.
Regrettably, the bill does little to ensure reduced operating costs, and the much-needed modernization of the system’s rail cars and buses won’t get the resources it needs. We also don’t yet know if the RTA’s replacement agency, the Northern Illinois Transit Authority, will have the structure and powers it needs to be effective.
As for Pritzker, his timely intervention helped de-bauble a bill that badly needed the trim.
And now that the transit bill is done, we need to keep an eye on the way Pritzker handles the next big, long-standing concern on the state’s agenda: responsible pension reform.
For at least a year, a coalition of unions calling themselves We Are One Illinois has pushed to reverse the pension reforms that took effect in 2011 — reforms that have saved the state and municipalities across Illinois billions of dollars.
The coalition claims that the state’s Tier 2 pension reforms don’t meet a federal requirement that Illinois’ pension benefits match those available from Social Security. And while Illinois may in fact have a so-called safe harbor problem, it’s likely nowhere near as large as the unions claim.
Such concerns are not the point in any case. Rather, We Are One Illinois is using the safe harbor issue as a pretext to undo Tier 2 — in other words, to replace the 2010 reforms that have saved the state billions, while still providing reasonable retirement benefits, with the kind of lush benefits that put Illinois’ pension systems on a path toward insolvency in the first place.
Pritzker has been justifiably wary of the undo Tier 2 movement. He acknowledged a year ago the need to fix the safe harbor problem, but without further sweeteners, and he hasn’t budged from that position since then.
The stakes are high: The unions would reduce the retirement age for people who have started working for the state since 2011; raise the maximum salary on which their benefits are calculated; and enrich their annual cost-of-living increases. State and private forecasts peg the added costs from the union-backed benefit increases at somewhere between $60 billion and $80 billion through 2045.
The We Are One Illinois proposal passed out of a House committee during the fall session that concluded last week. It likely will get a vote in the coming spring session.
Pritzker is on the alert. He warned last week that the bill needs “a lot more work” and that he won’t sign a proposal that would put the state’s credit rating at risk. The proposal would do just that.
The governor’s warning about the transit bill’s excesses prompted major revisions that led to passage of a more responsible bill.
Come next spring, Pritzker may need to intervene again — and even more forcefully against a strong union push — if he intends to prevent passage of a Tier 2 “reform” measure the state can ill afford.
David Greising is president of the Better Government Association.
Submit a letter, of no more than 400 words, to the editor here or email letters@chicagotribune.com.
