We’re familiar with change. If you’re reading this in your local paper, you’ve witnessed some serious changes in the weather over the past week! Author and motivational speaker Tony Robbins has said, “Change is inevitable. Progress is optional.” It’s a good point. Too many times change is marketed as a virtue. Even if the change is something we believe in, it’s the responsibility of the “changers” to prove that the change is good, to show us that it means progress. And it’s our responsibility to check in from time to time and ask, “Was that change really for the better? Where’s the beef?”
As I mentioned in last week’s column, Governor Pritzker was sworn in this month. He delivered a lofty Inaugural Speech that identified several issues in its 2,600 words. It focused largely on reforming our tax system, and on repairing our infrastructure needs, without many specifics. And it failed to prioritize our state’s biggest crisis – public pensions.
The pension crisis was at the top of my list when I was sworn in as State Representative. It was at the top of my list when I was first sworn in as your State Senator. And it is at the top of my list today. It is hard for me to believe our new Governor doesn’t realize how important the problem is.
Crain’s Chicago Business agrees. Its editorial board wrote on January 18 in an editorial, “Why didn’t the new governor address Illinois’ greatest crisis?” saying,
It’s true: There’s a time and a place for everything. And a new governor’s inaugural is meant to be a party—a time to celebrate new beginnings and to inspire pols and voters alike. So lacing one’s inaugural address with terms like “debt amortization,” “funding ratios” and “actuarial formulas” might have been a bit of a buzzkill, but that’s the job J.B. Pritzker signed up for when he ran to be the 43rd governor of a state struggling with unfunded public employee pension liabilities of $130 billion and counting. Like the proverbial poop in the punch bowl, the pension problem won’t be solved by being too polite to point it out.
Our pension crisis must be solved, and I certainly hope our new Governor is as committed to putting Illinois on sound financial footing as I am.
As I was considering the pension crisis, I began thinking about governing philosophy. One of the key ideological developments in conservative governing philosophy is that government should be run more like a business.
Four years ago, then-Governor Rauner argued that he needed to offer more money to his deputies and his chiefs of staff in order to attract the best talent. He said that he would “pay what we need to bring in talented people.”
Our new Governor made a similar argument during his first week in office. He authorized a 15 percent salary increase for cabinet members and department heads, and is using his own money to double the salaries of about twenty positions reporting to the Governor’s Office.
The idea sounds good on its face. Yet, I find myself asking more questions. Is there a market for government department heads? If so, how do we measure their success? What I mean is, what mechanisms do we have to prove to taxpayers that paying department heads is a good investment of their tax dollars and not patronage?
I’ve read recent developments in the private sector about CEO pay. We’ve all heard Democrats rail against excessive CEO pay, while not uttering a peep about massive raises for top bureaucrats. One thing stood out. According to Michael Dorff in his book Indispensable & Other Myths, the rise in CEO pay in the private sector is directly related to performance-based incentives. The challenge, Dorff argues, is that companies and economists aren’t sure whether the performance metrics, like stock price, that CEOs try to meet, means the company is better off than it was before the CEO took the job.
In other words, businesses are stuck. They want their business to improve so they create incentives for the people in charge. The problem is they haven’t been able to figure out if the incentives make a difference.
I began to wonder if any other states had seen any benefit from increasing pay for top officials in their state governments. There’s a lot of information about increasing pay. I haven’t found any information that tells me increasing pay is better for taxpayers.
Do any states offer incentive pay? The answer is yes. After the 2007 recession, several states began to offer bonuses to employees, including Texas, according to the Texas Tribune. The intent was to replace raises with bonuses to save money. Texas also added performance metrics to trigger the bonuses.
What was the result? According to the Texas Tribune, the bonus payments have more than doubled since 2007 while employees continued to get raises. The Tribune was unable to figure out how the employees receiving the bonuses improved government services for taxpayers.
If we are going to spend more of your money on people, we need to make sure the people are doing a good job. It’s true, both the private sector and the public sector have struggled to measure success. That does not mean we should spend the money first and figure it out later. Some of these people are former lawmakers whose pensions are definitely spiking, putting more burdens on you and me while making our pension crisis worse. Stay tuned….
If you have any additional thoughts or ideas, you can reach me or Glenda at 815-284-0045 or visit my website at www.senatorstewart.com and use the form to send me an e-mail.