CHICAGO — Illinois, a state with a reputation for political wheeling and dealing, back room handshakes, and 11th-hour bargains, desperately needs a deal to solve its biggest financial crisis in a generation....
The nation’s worst case of underfunding state employees’ pensions....
So who stole the money?
So who stole the money?
California and New York — states that, like Illinois, lean Democratic and have strong state employee unions — have taken unpopular, tough-love measures to pass pension reform.
Democrat, Republican, doesn't much matter when you are labor.
So have Kansas and Rhode Island — which in recent years kept Illinois company by having set aside barely half the money needed to fund their pensions — and dozens of other states. Among the changes are higher retirement ages, asking workers to contribute more, and switching to 401(k)-style plans.
Democrat, Republican, doesn't much matter when you are labor.
So have Kansas and Rhode Island — which in recent years kept Illinois company by having set aside barely half the money needed to fund their pensions — and dozens of other states. Among the changes are higher retirement ages, asking workers to contribute more, and switching to 401(k)-style plans.
Critics blame the situation in Illinois on procrastination, budgetary ‘‘gimmicks,’’ and frequent raids on state-employee retirement funds to pay for other expenses.
Now we know who stole it and broke the sacred promise.
Others blame an unwillingness to take on the unions, which help keep Democrats in power in President Obama’s home state.
Now we know who stole it and broke the sacred promise.
Others blame an unwillingness to take on the unions, which help keep Democrats in power in President Obama’s home state.
But it’s a problem decades in the making, through nearly a dozen Republican and Democratic governors and through legislatures controlled by both parties....
Getting a deal done will most likely require lawmakers to do things practically unheard of; Democrats would have to anger loyal union supporters, while Republicans would have to support a plan they think will lead to a tax increase. But without a fix, the payment the state has to make to its pension fund each year will continue to grow, leaving less money for things like education and health care that have seen big cuts.
What are their debt interest payments?
What are their debt interest payments?
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Print verbatim:
By 2016, Illinois would be spending more on pension payments than on schools, the governor's office estimates.
Pat Quinn, Illinois' current governor, says the upcoming session offers the best opportunity in his lifetime to solve the problem....
To many political veterans, the challenge is less a financial problem than a cultural one. They say the main reason behind the inertia is the same as what got the state into the mess in the first place: Illinois' particular adherence to the maxim that it's always easier to give than to take away, hence promising money to state employees while also spending it elsewhere.
Many states have pension shortfalls, caused largely because lawmakers promised teachers, police officers and other state employees healthy pensions, along with favorable retirement conditions, without putting aside enough money to cover the obligations. The shortfalls were exacerbated during the economic downturns of the last decade, which cut pension fund earnings. Retirees also live longer now and earn more in benefits.
I'm so siick of the corporate paper and its excuses.
I'm so siick of the corporate paper and its excuses.
But the state's fiscal situation worsened through the 2000s, as Gov. Rod Blagojevich took the helm. He is now imprisoned on corruption charges, including trying to sell Obama's vacated U.S. Senate seat.
What does that have to do with this?
What does that have to do with this?
In October, a task force led by former Federal Reserve Bank Chairman Paul Volcker and the former New York Lt. Gov. Richard Ravitch reported Illinois had relied on "budget gimmicks," borrowing and shifting money across funds and years. As the state saw its credit rating downgraded to the lowest level in the nation, Volcker and Ravitch warned the state must "change how it does business."
Feds do it!
Web adders:
While some states shorted their pension contributions mainly to get through bad economic years, Illinois was remarkably consistent in shirking its full obligations, even in the best of financial times....
Illinois lawmakers are quick to point out that several structural issues make the state's situation especially difficult to solve, from the way teacher pensions are funded to especially strong language in the state constitution that protects public employee benefits.
In 2010 they did make some gains, agreeing to changes for new public employees. But a major fix – dealing with benefits to the 700,000 existing workers and retirees – has remained elusive. A 66 percent state income tax hike passed in early 2011 didn't generate enough money to make a dent in the pension shortfall.
When are you going to learn that giving the beast more money doesn't work?
When are you going to learn that giving the beast more money doesn't work?
Union officials have offered lawmakers a deal, agreeing to contribute more to their own pensions if the state makes its full contribution each year and closes some tax loopholes for corporations....
Yeah, right!
Yeah, right!
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UPDATE:
UPDATE:
"SEC, Illinois settle pension charge" by John O’Connor | Associated Press, March 12, 2013
SPRINGFIELD, Ill. — Federal authorities announced Monday that Illinois has agreed to settle a securities-fraud charge that accused the state of misleading investors about the financial health of its public-employee pension systems, which are now $96.7 billion short of what’s needed to cover promised retirement benefits.
In a cease-and-desist order issued by the Securities and Exchange Commissions, Governor Pat Quinn’s administration admitted no wrongdoing in the way state officials borrowed money to pay pension obligations through $2.2 billion in municipal bond sales from 2005 to early 2009....
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