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Is Incompetence the Explanation for State Government Dysfunctionality?

I am generally suspicious of conspiracy theories. I believe that Lee Harvey Oswald was the lone gunman in Dallas; I do not believe that the CIA promoted cocaine in black neighborhoods to subdue Afro-American males or that Prince Philip and MI5 tampered with Dodi Fayed's limo the night of Diana's death; and I certainly do not believe that the 9/11 attacks were the work of President Bush and the American government.

Given my skepticism of conspiracy explanations, why am I dubious about the straightforward hypothesis that Illinois' dysfunctional budget situation is the result of incompetent politicians in Springfield engaging in Keystone Cops-like behavior? In fact, I believe there is an alternative reasonable argument and that politicians may be behaving with a degree of rationality. I will use the recent pension reform process as a case in point.

First the argument for incompetence is presented. It is common knowledge that Illinois' fiscal situation is among the worst in the nation with long-term deficits that promise to continue far into the future if current policies are not changed. Pension underfunding resulting from deficient state payments over several decades is an important, but not the sole or even the major reason for the problem.

To address the pension problem, the Illinois General Assembly in 2013 passed with bipartisan support and Gov. Pat Quinn signed SB1 that made significant changes in pensions that reduced the promised benefits of annuitants and the expected benefits of current employees. These changes would eventually have saved an estimated $2 billion a year. However, these changes would have eliminated less than 25 percent of the long-term deficit.

Pension reform as manifested in SB1 suffered from two serious defects. First, it was drafted with all the skill and finesse of a Civil War surgeon, cutting benefits in capricious ways that would have had serious impacts on the ability of the state and especially state universities to recruit and keep key employees. Many of the purported savings would have been offset by higher salaries needed to respond to less generous pension benefits. The Chicago Tribune recently reported that Gov. Rauner's choice for state school superintendent was provided a substantial bonus to make up for reduced pension benefits.

Second and more importance, SB1 was unconstitutional, violating the non-impairment clause of the state's constitution. This should have come as no surprise since the first part of the bill admitted that it constituted an impairment and argued that it was necessary to address the state's budget problems even though the changes dealt with only a small part of the problem. In January 2015, the General Assembly allowed a temporary income tax increase to ratchet down that created a large budget hole that would have swamped the pension reform savings. Even more puzzling is the fact that Senate President John Cullerton's staff produced a law journal-style white paper arguing that the bill was unconstitutional while the bill under consideration.

Is not the approval of a poorly targeted bill that was likely unconstitutional and that entailed a substantial political cost is a prima facie case for dysfunctionality? There is another explanation why intelligent and calculating legislators would engage in this futile effort. Politicians have notoriously short time horizons. The failed pension reform process bought the governor and General Assembly time. It allowed them to "kick the can down the road" with a degree of political cover. From the passage of the bill in December 2013 to the time it was ruled unconstitutional in May 2015, politicians could assert that they were dealing with pension problems. This was useful in navigating the 2014 elections.

In addition, the failed pension bill provided politicians with a response to criticism from the Chicago Tribune and the Civic Committee of the Commercial Club of Chicago who advocated reforms similarly to SB1. Politicians can argue that they tried to implement the proposed reforms and failed through no fault of their own. The failure might also provide for the impetus for a constitutional amendment to deal the no impairment constraint.

This argument about the rationality of politicians is not very encouraging since it suggests that the chaos in Springfield may be the result not of incompetence, but shrewd design.

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