Illinois in ‘Death Spiral,’ Says Gubernatorial Candidate

June 18, 2013 | by the Office of Marketing and Communications

Saddled with the lowest credit rating among states and facing nearly $100 billion in unfunded pension obligations, Illinois needs a major course correction to pull out of a “death spiral,” Bruce Rauner, a Republican candidate for governor, said on June 17 at Elmhurst College.

“In the last four years, all we’ve seen is our state become worse and worse, and we’ve entered a death spiral,” Rauner said. “Our taxes are rising, our tax base is eroding, businesses are leaving, schools are deteriorating and talented people are leaving the state. We can’t just slow a death spiral. We need to come out of it, reverse course dramatically and become a growth state again.”

Rauner’s talk was the inaugural event in Elmhurst College’s new lecture series, Fixing Illinois: A Great State’s Problems and Promise.

Designed to encourage ongoing discussion about the state’s challenges and to empower citizens to address those challenges, Fixing Illinois will present a variety of perspectives on how to solve the state’s problems. The College has invited every declared and potential candidate for governor to participate in the series.

Rauner, a venture capitalist and former chairman of a private-equity firm, is making his first bid for public office under a campaign theme of “Shake Up Springfield, Bring Back Illinois.” He said his top priority as governor would be to stem the loss of jobs and businesses to other states.

“If we don’t have a booming economy, we can’t afford great schools, we can’t afford a social safety net,” he told the audience at the Frick Center on the Elmhurst campus.

Illinois’s current pension mess, Rauner said, is the result of state employee and teachers unions buying the votes of legislators with large donations. Legislators then approved generous pay raises, healthcare benefits and pensions for the unions but did not fund future costs.

Unions, he said, “pretty much own the Democratic Party, and unfortunately they have bought a fair number of Republicans in Springfield too. The pensions are completely unaffordable and too generous. Cadillac healthcare for government workers is unaffordable and unfair to taxpayers.

“That’s money coming out of our schools, that’s money that’s coming out of our safety net for our most disadvantaged citizens and that’s money coming out of the pocketbooks of small-business owners who should be using that money to create jobs in Illinois,” he said.

“We have to change that system. It’s fundamentally corrupt.”

Rauner’s remarks came as the state Legislature was about to convene a special session in Springfield called by Gov. Patrick Quinn, a Democrat, to get leaders of the Senate and House of Representatives to fix the state pension system, which is underfunded by nearly $100 billion. Democrats control both houses of the Legislature, but after months of discussion they have been unable to agree on ways to make the pension system solvent.

Rauner said he is “extremely frustrated” by the inability of Democrats to agree on a solution. Proposals in both houses “are a step in the right direction,” but neither goes far enough because they guarantee that the current defined benefit plans will continue, he said.

Rauner said he would honor current pension obligations but “change the system dramatically” and “end that structure as of today,” replacing defined benefit pensions with defined contribution plans that are more like 401(k) retirement programs offered by most businesses.

“Someone has to get in there and rip it all out,” he said of the state’s current pension programs.

Rauner said the state’s low credit rating, though still investment grade, will cost taxpayers “tens of millions of dollars” in additional interest when the state borrows money.

The best way to improve the state’s credit standing is with a “pro-business, pro-growth, job-creating economy in Illinois,” he said.

On education, Rauner chided the state government for taking money from schools to pay for other programs and criticized the state’s standardized testing of student progress as “a joke, an embarrassment.”

He has supported the creation of charter schools in Chicago that operate autonomously, and said parents should be given vouchers they can use to send their children to better schools outside their neighborhoods. He also called for teachers and principals to receive merit pay and said tenure was the wrong incentive for retaining educators.

“It’s never made sense to me why there’s tenure in education. There’s not tenure in the rest of life,” he said. Instead of attracting teachers with the promise of tenure and a pension, he said, they should be offered rewards for teaching performance.

Tenure for politicians also should end, Rauner added, calling for elected state officials to be limited to eight years in office, including the governor.

“This should be public service, not a career where you make money from being a politician. After eight years, everybody goes. That would help to break up that cabal that’s down there (in Springfield),” Rauner said.

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