3 Ideas on Dealing With Illinois' Pension Crisis

05/18/2015 12:37 pm ET | Updated May 18, 2016

Now that the Illinois Supreme Court has said that the state's 2013 pension reform law won't fly, Illinois finds itself in a difficult position. How to (legally) reform the state's pension systems in a way that saves money and maintains the necessary components of the pensioners' benefits?

Reboot Illinois' Madeleine Doubek outlined a few ideas:

So, now what?

We've compiled a boiled-down guide to the ideas being offered up and debated to help with the Illinois' worst-in-the-nation pension debt.

1. Raise taxes.

Quick backgrounder: Gov. Bruce Rauner has avoided talk of taxes and demanded cuts first since he took office, but he did talk, in his campaign, about expanding the state's sales taxes to services. He also promised only that the temporary income tax would drop back fully at the end of his four-year term. Supreme Court justices seemed to be chiding lawmakers for letting the income tax rate drop to 3.75 percent from 5 percent on individuals.

Pros: Raises money quickly.

Cons: Hated by taxpayers. Tends to drive away people and job-supporting businesses, making it more difficult to raise enough revenue. An income tax increase in 2011 did not make much of a dent in our debt.

Likelihood: With super-majority Democrats in control and the court decision making clear many other options would be considered unconstitutional, the probability of tax increases rose dramatically.

2. Re-write the constitution; lower benefits for future work.

Quick backgrounder: Rauner recently has suggested paying lower-cost benefits to current workers for their future work and re-writing the constitution to make that move legal.

Pros: Rauner's budget staff estimated it could save $2.2 billion this year if implemented.

Cons: Doesn't help with past debt. Likely would prompt a lawsuit, as the Supreme Court seemed to strongly indicate retirement benefits granted to a worker on day 1 of employment are due that worker through life.

Likelihood: Questionable. Will take time. For Rauner's idea to work, it would require a three-fifths vote of both the Democratic-led House and Senate to pass a constitutional ballot question. That question could not go to voters until November, 2016. At that election, three-fifths of voters casting ballots on the amendment would need to approve it, or a majority of all those voting in that election.

3. Negotiate with labor unions; agree on a "consideration" swap.

Quick backgrounder: Democratic Senate President John Cullerton previously had suggested the reform law was unconstitutional and instead offered a swap of sorts referred to as "consideration" in contract law. He'd previously suggested offering workers a choice between sweeter health care or sweeter pensions, but now is suggesting workers could opt between getting compounded 3 percent yearly cost-of-living adjustments without those future pay raises counted in their pensions, or they could continue to count pay raises in retirement benefits but get lower non-compounded yearly raises.

Pros: Might have a better chance of avoiding legal challenge. Could save $1 billion annually.

Cons: Doesn't save as much as the reform law just rejected. Will unions be willing to deal?

Likelihood: House Speaker Michael Madigan's spokesman was non-committal; Rauner's spokesman expressed a willingness to work with the General Assembly. Could be part of a grand compromise.

Read about four more possible options at Reboot Illinois, including a few ideas you might not have heard before.

Gov. Bruce Rauner is reassessing his own pension reform ideas after the Supreme Court's opinion came down. He told reporters in Springfield May 14 that he and Senate President John Cullerton both are working on developing new ideas that are definitely strong enough to pass constitutional muster. Rauner said the government is ready to move forward with several ideas all at once.

"We are feverishly endeavoring to come up with a solution that we have a high confidence level that will pass constitutional muster, because we can't afford to spend years in court and up with, like we did here, with no real change. We can't afford that," he said.

Read about what else Rauner discussed at the Capitol at Reboot Illinois.