I believe that Illinois, like many cities, counties, and states, is heading for a meltdown over its public employees’ pensions but that here in Illinois the crisis is likely to have particular severity. Consider the following two stories and an article from Illinois’s state constitution.
Chicago cops protest contracts during IOC visit
CHICAGO – Protesters took their causes to the streets Thursday as an International Olympic Committee delegation arrived in Chicago — their first stop among four cities vying to host the 2016 Summer Olympics.
As committee members checked into the Fairmont Hotel and geared up for several days of meetings and bravado, Chicago police officers picketed City Hall, using the IOC visit to draw attention to a contract dispute, and the group “No Games Chicago” staged a downtown march and rally.
The opposition group, which believes the Games are bad for cities financially and can displace thousands of people, says money and energy directed at the Olympic movement should go toward schools, hospitals and transportation.
“The priorities in the city of Chicago, they’re putting on an Olympic games while the city is crumbling around us,” group member Bob Quellos said. “We’re being sold lies.”
[…]
Earlier Thursday, organizers estimated about 3,000 Chicago police officers circled City Hall and chanted, objecting to recent actions in contract negotiations.
While union officials would not say they planned the protest to coincide with the IOC delegation’s arrival, the message was implied everywhere and officers participating said it helped the cause.
Several officers wore black T-shirts featuring white chalk outlines of bodies and “Chicago 2016” written underneath. Another had handcuffs in the shape of the Olympic rings. Other protesters criticized city officials; one sign read “Daley Unfair. No Games.”
The city’s police officers have worked without a contract since June 2007. Most recently, an offer that included pay raises was taken off the table, which infuriated many officers who came to the protest.
Illinois teachers’ pension head to quit
SPRINGFIELD, Ill. – The head of a teachers pension fund rocked by a corruption scandal and singled out by Gov. Pat Quinn for a housecleaning told The Associated Press on Tuesday that he is quitting.
Jon Bauman, who was executive director of the Teachers Retirement System 18 months before indicted former Gov. Rod Blagojevich took office, said he will tender his resignation at the trustees’ meeting Wednesday.
It was the first substantial comment Bauman had made since Quinn signed legislation Friday that overhauls state pension and investment boards. That law replaces the boards of four agencies and specifically fires Bauman as of July 1.
Democrat Quinn’s action came a day after a 19-count federal indictment of Blagojevich and five associates, charged with a far-reaching scheme to enrich themselves, including at the TRS doorstep.
And consider Article XIII Section 5 of the Illinois Constitution:
SECTION 5. PENSION AND RETIREMENT RIGHTS
Membership in any pension or retirement system of the State, any unit of local government or school district, or any agency or instrumentality thereof, shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.
This is settled law in Illinois—it’s been litigated right up to the Illinois Supreme Court. That’s not at all surprising when you recognize that the pensions of Illinois state judges including Supreme Court judges and all attorneys employed by cities, counties, and the state itself were on the line.
Yesterday while we were working on the election we were repeatedly harangued by police officers coming in to vote. Their greatest concerns were benefits, pensions, and what they referred to as the “support of the community”. I think they’re right to be concerned.
However, I think we’re flying headlong into a problem from which I don’t see any easy way of extricating ourselves. Police officers, firemen, physicians employed by the county, and any number of other public employees are paid total compensation that are several standard deviations above the median total compensation in their cities, counties, and the state.
Who wouldn’t like to pay police officers, firemen, and teachers more? Police officers, firemen, and teacher are already paid well here and receive very generous pensions which can’t be reduced without amending the state constitution and the state legislators will never be able to do that. It would be political suicide, especially considering how much of their support comes from those same civil employees. But there’s a proverb that covers this situation: you can’t get blood from a stone. Every underlying good on which the various governments base their revenues, e.g. income, property values, and retail sales, is tapped out.
The only real candidate for more revenue is an increase in the state income tax which certainly explains why Gov. Quinn is pursuing that avenue. I suspect it will be very difficult to secure. What are they going to do? Keep increasing the state income tax to meet their expenses even as incomes in the state fall? That’s going to be a very hard sell.
Additionally, a remarkable proportion of “the rich”, people in the top quintile of income earners, are public employees and physicians. The notion that you can tax the rich to pay the rich strikes me as being in the same league as perpetual motion machines. It would be wonderful if you could do it but it violates the laws of physics.
Taxing the poor to pay the rich violates the laws of arithmetic. And politics.
Corruption.
Pennsylvania, where I live, faces a similar crisis. Or, it would be more accurate to say, refuses to face it.