I actually agree with the message of Crosby Smith’s op-ed in USA Today:
Illinois pensions are modest, just $32,000 a year on average. Since most public service workers aren’t eligible for Social Security, our pension is all many of us will have in what should be our golden years.
Politicians ran up our state’s pension debt over decades by using our retirement funds like credit cards. Instead of raising revenue or cutting costs, they skipped or shorted pension payments.
A pension is a promise that shouldn’t be broken. My life savings shouldn’t be taken to let politicians avoid tough choices. The Illinois Constitution agrees, saying pensions can’t be cut.
That’s only slightly misleading. Here in Chicago CPS teachers start at $50,000 per year for a nine month job with a median of over $80,000 while police and firefighters average in the low six figures when you include the overtime that’s nearly always available. When a teacher, police officer, or firefighter retires, he or she is eligible for a pension that’s 75% of ending salary.
But I agree that the state’s politicians are the primary culprits and that retirees should receive what they’ve been promised. Why those politicians are re-elected term after term with the support of Smith and Smith’s peers eludes me.
Here’s the proposed solution:
Our state’s fiscal problems stem from our low, flat income tax that allows rich folks to avoid paying their fair share, while two-thirds of Illinois corporations pay no income tax at all. To fund schools and other public services while paying the state’s bills, we need to close loopholes and enact a fair, graduated, tax.
Two-thirds of Illinois corporations pay no income tax because they’re small and aren’t making any money. Any tax that raises more revenue will at the margins drive businesses and individuals out of the state. Illinois’s population and economy are shrinking. What Illinois needs most is economic growth. Higher taxes won’t accomplish that.
Here are some alternative proposals for straightening out Illinois’s finances:
- Immediately convert Illinois’s public employees from defined benefit pension plans to defined contribution pension plans. Illinois’s problem is not that we’re not taxed enough. It’s that Illinois’s politicians didn’t kick in to the public pension funds as they’d promised.
- Cut the pay of present Illinois public employees. There was a huge run-up in public pay here during the Aughts. The state can’t afford it especially when pensions are yoked to pay.
- Reduce pay and eliminate pensions for state elected officials. Reduce expense budgets for elected officials.
- Impose term limits on all Illinois state politicians.
Those are remarkably similar to Gov. Rauner’s proposals which have received no consideration from the state legislature at all.
Illinois can’t meet its present let alone its future commitments with a shrinking economy. Sooner or later (probably sooner) Illinois will be unable to borrow to pay its bills. You can’t get blood out of a stone.
From someone not from Illinois, is there actual popular majority support for any of the 4 measures listed?
My perception is Illinois would rather run through OPM (other people’s money) like bond holders, the federal reserve, the federal government before engaging in reforms. Not a illogical choice; stretch out the day of reckoning….
I suspect they have very little support.
I think its misleading. The average pension is pulled-down by a lot of people who only work a few years who are not relying upon a small pension to survive after retirement. I’ve not seen a distribution, but I believe if you look at subsets like Chicago teachers, the distribution is going to be bimodal btw/ those who worked until retirement age and those that pursued a different career.
Also, I think almost all public service workers are in the SS system, except for teachers, who of course don’t pay for SS, and frequently had their payments into their pension system paid for them.
Legally, it doesn’t matter, whether the pension is $700 per year or $70,000, but this sort of misleading characterization sours me on the rest of this.
I agree.
Another thing that the op-ed obscures: there’s a major conflict brewing between retired public employees and current public employees. Unless you believe that 100% of the costs of paying those pensions will be borne by taxpayers and 0% by reducing costs, at some level paying promised pensions necessarily translates into lower total compensation for present and future workers. That has been the case in the past. Look at the tier systems in place in many school districts.
I think that resentment will grow. That resentment could take on racial dimensions when the overwhelming preponderance of retirees are white as the percentage of black and Hispanic present public employees rises.