Illinois Senate President John Cullerton said Sunday that the state's massive public employee pension debt is not a "crisis," but instead an issue being pushed by business-backed groups seeking lower income taxes at the expense of retiree benefits.

"People really misunderstand the nature of this whole problem. Quite frankly, I don't think you can use the word 'crisis' to describe it at the state level," Cullerton said in an interview on WGN-AM radio.

"It's something we have to deal with, but it's not something that we're on the verge of bankruptcy on," Cullerton said.

The Chicago Democrat's remarks came as lawmakers prepare to return to Springfield on Tuesday for the fall session with the issue of Illinois' worst-in-the-nation $100 billion unfunded pension liability at the top of the agenda. Critics have contended the pension problem has created an unstable economic environment in Illinois, and the state's bond rating has been downgraded over the failure of government to deal with the issue.

A bipartisan House-Senate panel has been meeting since June in an attempt to come up with a plan to alter retirement benefits without running afoul of a state constitutional prohibition against diminishing or impairing pensions.

The group's work has centered on a plan that would replace the yearly automatic 3 percent compounded increase in pensions with a formula to provide an increase of half the rate of inflation. Cost-of-living increases also would be subjected to a freeze with the length dependent upon the age of the worker. In addition, the salary used to calculate a pension would be limited.

Cullerton said he could support the plan, estimated to save about $138 billion over 30 years, as a compromise. Cullerton had pushed his own plan, backed by unions, which would save a projected $57 billion, while House Speaker Michael Madigan authored another proposal estimated to save $163 billion.

Still, Cullerton said that under a 1996 law aimed at gradually boosting the amount of money put into the state's pension funds to eventually get them funded at 90 percent of their liability, payments to the retirement systems are already near their highest level and require only small annual future increases to stay on track. As a percentage of state general revenues, pension payments would continue to be about one-fifth of the state's general revenues through 2044, his office said.

But the Senate president also noted that the state's personal income tax rate is scheduled to fall from 5 percent to 3.75 percent, and the corporate rate is supposed to drop to 5.25 percent from 7 percent in 2015. The loss of revenue is estimated at about $5.4 billion.

"These pension (proposals) we've talked about will save annually anywhere from $750 million to $1.5 billion. So you're still going to have real huge cuts that we'll have to make if we don't raise that income tax higher than what they're scheduled to go down to," he said.

"But the pension reform then is about tax reduction — not about the solvency of the pension fund or about diverting money to spend more money for education," he added.

Cullerton said the conference committee's pension framework represents savings equivalent to lowering the state income tax by 0.25 percent.

"That's really what it's about. Now, I wouldn't call that a crisis. I think people should put that in perspective," he said. "Keep in mind, it's not going bankrupt. The money that we save by lowering those benefits is going to be used to lower the tax rates."

Cullerton contended top business organizations were pushing the pension changes for the benefit of lower taxes and that the public was generally supportive because many people have been moved to 401(k)-style defined-contribution plans from the defined-benefit type of plans that state retirees receive.

The state Senate president said he was unsure whether Republicans, who have pushed for larger savings than what the conference committee has discussed, will support a final plan. Noting the panel contains a number of GOP lawmakers running for higher office next year, Cullerton accused them of "trying to out-Republican each other" in advance of the March primary.

He said if Senate Republican leader Christine Radogno of Lemont can get the support of a dozen Republicans for the conference committee framework, "I think (Democrats) can get 18 votes and pass a bill over to the House."

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