Gov. Pat Quinn won’t use emergency budget powers to raise health insurance rates for state retirees, the governor’s budget director said Friday. Quinn is expected to be given sweeping powers over the budget to manage spending and many retirees feared he would use them to increase costs.
Gov. Pat Quinn won’t use emergency budget powers to raise health insurance rates for state retirees, the governor’s budget director said Friday.
David Vaught acknowledged the idea is controversial among lawmakers and that both state law and the labor contract with the American Federation of State, County and Municipal Employees come into play.
“It’s very difficult legally, and we think the best way to approach that is with a collective bargaining approach with the union instead of trying to do it unilaterally through the emergency budget act,” Vaught said during a meeting with The State Journal-Register editorial board.
Roberta Lynch, deputy director of AFSCME Council 31, said the union is pleased to hear it.
“We said all along the contract would prohibit those changes,” Lynch said.
Changing what retirees pay for health insurance would require reopening AFSCME’s contract with the state, she said.
“We have no intention of reopening the contract. We think the system is fair now,” Lynch said.
Retirees with 20 or more years of state government service do not pay health insurance premiums, although they are subject to out-of-pocket expenses such as co-payments.
Quinn is expected to be given sweeping powers over the next fiscal year’s budget by the General Assembly to manage spending during the state’s financial crisis. Many state retirees feared the governor would use those powers to unilaterally impose higher health-care costs on them.
The concern was heightened because the administration last year imposed an $11-per-month fee on retirees for dental insurance. That’s the same amount paid by active employees for the coverage.
“We thought that was an imbalance,” Vaught said Friday. “He (Quinn) didn’t think that was an onerous amount.”
AFSCME disagreed and took the matter to an arbitrator, who ruled for the administration, so the dental fee is still in place. The union is now challenging the fee in court.
The administration and AFSCME are discussing ideas that could save the state $70 million in health-care costs. Lynch said the ideas would help the state’s health-care plan “operate more efficiently.” She would not discuss details.
Vaught also reiterated the administration’s belief that lawmakers should approve a borrowing plan to make next year’s pension payments. The state needs to devote $3.7 billion to pensions, and the Illinois House rejected efforts to make that payment through borrowing.
The administration argues that borrowing money for the pension payments is the least-expensive alternative, because skipping the payments entirely will cost the pension systems billions of dollars in lost investment income. And diverting money from paying bills owed to vendors subjects the state to late-payment penalties even larger than interest costs on pension borrowing.
But Republican votes are needed in the House to pass a pension-borrowing bill, and so far, the GOP is united in opposition. Sara Wojcicki, spokeswoman for House Republicans, said the GOP has not been involved in any budget meetings or negotiations since lawmakers left Springfield on May 7.
Doug Finke can be reached at 788-1527.