The Illinois House approved a comprehensive pension-reform plan for the first time on Thursday after years of talks.
The House voted 62-51 Thursday to advance the measure -- SB1 -- sponsored by House Speaker Michael Madigan.
The Chicago Democrat's proposal is designed to close a $97 billion deficit that dogs the state's pension plans. Underfunding for decades has left the accounts short of what they need.
The legislation requires employees to contribute 2 percent more of their earnings to their pensions. They would also have to delay retirement and accept less-generous annual cost-of-living increases.
The state would guarantee it would make its required contribution every year.
The measure now goes to the Senate where President John Cullerton has his own ideas about reform.
Union representatives threatened a lawsuit Wednesday over the attempt to lower the retirement benefits of public employees in Illinois, but the committee advanced the plan anyway.
Gov. Pat Quinn left no doubt whether he would sign the legislation if it reaches his desk.
"Today the Illinois House of Representatives took the biggest step to date towards restoring fiscal stability to Illinois," Quinn said in a released statement. "With the passage of this comprehensive pension reform solution, Illinois is closer than ever to addressing a decades-long problem that is plaguing our economy, our bond rating and the future of our children."
The far-reaching proposal represents Madigan's first direct involvement on a piece of legislation to tackle the deficit. The bill addresses four of the five pension systems representing state employees, university professionals, primary-school teachers, and legislators.
"It will bring solvency and stability to the four systems," Madigan said, later explaining that the fifth account, covering judges, was left out as a "practical judgment." Reform advocates say judges are exempted because it will be the Supreme Court that ultimately decides the plan's constitutionality, a likelihood endorsed by half-a-dozen union leaders protesting the legislation.
"It will invite and get a legal challenge," said Mike Stout, business manager of ISEA-Laborers' Local 2002.
Former White House Chief of Staff Bill Daley, who continues to mull a challenge to Quinn in the next governor's race, applauded Madigan's legislation.
"I think it is a serious attempt by the speaker to solve a problem that is choking the economic future of this state in a way that everybody suffers," he said during a sit-down interview with NBC Chicago on Thursday. "You could make the argument that this isn't fair to certain people -- and it may not be -- but for the greater good of the 12 million people in Illinois, this is the only train leaving the station."
Unions have long contested legislators' attempts to get the pension mess under control, holding up a provision in the state constitution prohibiting the state from diminishing promised pension benefits. They point out that employees have for decades made required pension contributions out of their paychecks while the state notoriously shorted or even skipped pension payments.
Union official Henry Bayer said the plan appears to take care of the underfunding, but it shouldn't at the expense of employees.
"It's good that you're not kicking the can down the road," said Bayer, executive director of the 40,000-member American Federation of State, County and Municipal Employees. "It's bad that you're kicking our members in the butt."
Trying to catch up with the shortfall will force the state to pay $6 billion to pension counts alone in the coming fiscal year, nearly one-fifth of the total available in general revenue that must also go toward education, health and public safety.
"Illinois' economy will not fully recover until the General Assembly passes this comprehensive pension reform and sends the bill to my desk," Gov. Pat Quinn said in a prepared statement.
Madigan's plan calls for employees to pay 2 percent more of salary toward their retirement plans. Workers would only be able to collect pension on a salary up to $110,000, which would increase by 0.5 percent of the inflation rate per year.
Retirees would keep the 3 percent compounded annual cost-of-living increases received up to now, but future COLAs would be 3 percent of $1,000 per year of service, or $800 for someone receiving Social Security.
The Associated Press' John O'Connor contributed to this report.