Wednesday, January 9, 2013

Will Illinois Dems Snooker Repubs on Pension Reform? Don't Answer That

Despite a recent 67% hike in the personal income tax flat rate and an almost 50% increase in the corporate income tax rate, Illinois is sinking deeper in debt because the increased revenues are not keeping up with ever-increasing pension payments.  For years, Illinois Democrat politicians, abetted by the occasional Republican, have rewarded their state employee party supporters with salary and benefit packages that are not only higher than the private sector but unaffordable.  For years, in a state that has been dominated by Democrats for generations, Democrat pols have used fiscal chicanery and massive borrowing to hide the debt and delay the day of reckoning.  But that day is just about here.

Per the Wall Street Journal (link) on January 7:
Illinois is wrestling with a $95 billion pension gap that has left it neck-and-neck with California for the worst state credit rating in the country. The Democrat-controlled legislature has been stalled over how to reverse its failure over decades to adequately fund pensions for state workers.... Several states are struggling to right their pension funds, which have been battered by lackluster investment returns, increases in benefits paid out and chronic underfunding. But Illinois stands out as the worst, with only 45% of assets needed to meet future obligations based on 2010 data....
After the Democrat governor and the state House and Senate, both with Democrat super-majorities, failed once again to enact some kind, any kind, of reform, the governor came up with a bold new plan.  A "bipartisan" commission appointed by the super-majority Democrats and the rump band of surviving Republicans that would come up with binding changes.  That's right -- pawn the whole mess off to a committee that Dems would give, for once, equal representation to Republicans so the latter can take equal heat for cuts to the over-generous pension benefits.  Do Democrats possibly think that Illinois Republicans could be stupid enough to fall for such a transparent ploy?  ... Don't answer that question.

From the Chicago Tribune (link) yesterday:
The Illinois House adjourned this afternoon without even voting on Democratic Gov. Pat Quinn's desperation pension reform plan. Quinn threw his support behind a bill that would set up a commission to decide how to fix Illinois' financially failing government worker retirement systems. Conventional efforts to craft a compromise on pension changes have gone nowhere during the lame-duck session. The new measure filed today would set up an eight-member commission appointed by the four legislative leaders. The panel would issue a report on pension system changes that would become law unless the General Assembly voted to overturn it.
One way or another, pensions will be reduced, though I feel for honest retirees.  But public employees vote heavily Democratic, so in some large sense it's their own fault, to say nothing of the rampant abuse like final-year salary spiking that guarantees by formula a higher, undeserved pension.  What is unsustainable will end, and what can't last forever won't.

John M Greco

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