SUBSCRIBE to Capitol Fax      Advertise Here      Mobile Version     Exclusive Subscriber Content     Updated Posts    Contact
CapitolFax.com
To subscribe to Capitol Fax, click here.
Fun with numbers

Tuesday, Jan 21, 2014

* AP

Recent pension reform legislation has been hailed as historic and groundbreaking, but the $160 billion savings plan ultimately won’t make much of a dent in the state’s growing deficits, a report released Tuesday says.

While the changes to the state’s major public pension systems will eliminate their unfunded liability over the next 25 years, the state’s deficit will increase to $13 billion during that time, according to the University of Illinois’ Institute for Government and Public Affairs study.

Institute researchers had projected a $14 billion deficit - a $1 billion difference - if the state had not implemented pension reform.

“The deficit has gotten off the front burner,” Institute Director Chris Mooney said. “And the pension solution, while important, in terms of (its effect on) the budget, it’s a red herring.”

The study is here.

* The Institute is projecting a $1 billion deficit for this fiscal year that doesn’t actually exist. If that’s the case, then I really gotta wonder about the rest of their numbers.

And even using their possibly flawed numbers, the pension reform (if it survives the courts) will save Illinois on average about a billion dollars per year through 2025, using a “cash budget gap” formula. Annual savings are designed to go way up after that, however.

* Also, the Institute admits that a different projection formula, which accounts for the annual change in unfunded liability, is “arguably more meaningful.” Using that projection of the pension reform law’s impact, you get an average annual savings of $5.5 billion. That’s pretty darned substantial.

And using that “arguably more meaningful” formula, if both the tax hike and the pension reform law remain in place, the average annual budget gap over twelve years is about $800 million. That ain’t great, but it’s far more manageable than repeal of both laws, which gives us an average annual budget deficit of a whopping $10.5 billion. Using the cash budget gap formula, repeal of both the tax hike and pension reform laws would result in an average annual deficit of $8.2 billion.

* So, yeah, not all problems are solved, but they are a whole lot more manageable with a permanent tax hike and the new pension reform laws than without.

- Posted by Rich Miller        


19 Comments
  1. - langhorne - Tuesday, Jan 21, 14 @ 12:28 pm:

    tho i dont much like it, i hope the pension reform law, or most of it, is upheld. only because i dislike the cullerton approach even more.


  2. - wordslinger - Tuesday, Jan 21, 14 @ 12:44 pm:

    I don’t see how you can reasonably project deficits 25 years out.


  3. - Liberty - Tuesday, Jan 21, 14 @ 12:45 pm:

    So it won’t hurt the state so much when the court tosses. Shame on the Republicans for their disdain for contractual law. Shame on the Democrats for their betrayal of employees.


  4. - 47th Ward - Tuesday, Jan 21, 14 @ 12:47 pm:

    When you describe a competing or opposing viewpoint as “arguably more meaningful,” then it’s time for you to re-think your case and maybe start over.


  5. - AnonymousOne - Tuesday, Jan 21, 14 @ 1:00 pm:

    All those hurt by the pension law have known from the start that pension thumping is not about saving the state from financial ruin. It was a call for blood letting from the disdained teachers and public employees simply because many in the private sector have lost some of their benefits. The only way to get back on financial track that even vaguely involves the topic of public pensions is the Martire plan, the plan that no legislator would lend credence to. Just re-emphasizes why we’ve gotten into this mess in the first place. Incompetence and politicking.


  6. - Rob Roy - Tuesday, Jan 21, 14 @ 1:04 pm:

    First if the state had paid it’s portion all along there wouldn’t be a shortfall. And correct me if I am wrong but I think the number they throw out is if they had to pay it out all at once not over time. Will not stand up in court.


  7. - illinifan - Tuesday, Jan 21, 14 @ 1:10 pm:

    Pension reform was indeed a red herring, but can happen now is to say to the citizens of Illinois that the tax hike has to remain in place and justify it with saying reform was done but it was still not enough. The hope is to make the tax hike more palatable by saying the employees took a hit as well. If the pension reform is thrown out later, by then the tax hike or other tax reforms are permanent.


  8. - Andrew Szakmary - Tuesday, Jan 21, 14 @ 1:12 pm:

    I wish I could deputize myself, declare police powers, and unilaterally force banks who lent me money on my mortgage, credit cards and student loans to accept less than what I contractually owe them. My personal financial situation would improve quite dramatically! But I suppose only rich and powerful entities like the State of Illinois can do that.

    Is this what we have come to? In place of the rule of law, and equality before the law, we will simply substitute the old Hungarian proverb: Jupiter is allowed to do things that oxen are not.


  9. - Chi - Tuesday, Jan 21, 14 @ 1:12 pm:

    The numbers on how the tax hike effects the deficit is the biggest reason Rutherford is the only GOP candidate that is being reasonable. The others are flat out lying, taking us for fools.


  10. - anon - Tuesday, Jan 21, 14 @ 1:39 pm:

    “not all problems are solved, but they are a whole lot more manageable” Manageable for whom? Not for those who just had 30 to 50 % of their life savings stolen by pension “reform.”


  11. - JustMe_JMO - Tuesday, Jan 21, 14 @ 2:15 pm:

    A question vs comment.

    I wonder if any of our elected leaders have any thoughts on what will be required after the court makes it final ruling?

    Does the court have to rule on Public Act 098-0599 as a whole or can they rule on individual changes within it?

    “Beginning July 1, 2014, all Tier 1 employee contribution rates will decrease by 1%.”

    If upheld the state immediately starts losing pension revenue. If rejected the state has to recoup over payments from employees.


  12. - Anonymous - Tuesday, Jan 21, 14 @ 2:21 pm:

    === So, yeah, not all problems are solved, but they are a whole lot more manageable with a permanent tax hike and the new pension reform laws than without ===

    === I don’t see how you can reasonably project deficits 25 years out ===

    Frankly, I don’t see how you can reasonably project savings 25 years out. Not with the profligate spending ways of the state gov’t.


  13. - Jimbo - Tuesday, Jan 21, 14 @ 2:38 pm:

    I’ll keep my 1% and my pension thanks. Oh, I’m not allowed to unilaterally dictate terms? Glad we agree. :). Really, I’m happy with my benefits reduced or not, I’m just concerned further reductions will follow if this holds up in court.


  14. - AnonymousOne - Tuesday, Jan 21, 14 @ 2:40 pm:

    In anticipation of less income from the pension cut, we’ve had lots of fun helping to cut the incomes of various service providers we’ve subscribed to over the years. They seem indignant that we’re leaving them to preserve our income, thereby hurting theirs, but that’s a consequence of less spendable income by a significant portion of citizens in this state. More than public employees/pensioners are going to be impacted at a time when our state is struggling to get back on it’s feet financially. Oh well. What did they think would happen?


  15. - Chris - Tuesday, Jan 21, 14 @ 3:44 pm:

    “I’ll keep my 1% and my pension thanks.”

    I’ll take the cut to 3% income tax and let somebody else pay for it after I move to another state, thanks.

    It’s equally dumb with whatever variation.


  16. - Arthur Andersen - Tuesday, Jan 21, 14 @ 4:41 pm:

    Rich, I’ve read this thing three times and it flat don’t make sense. May be getting slow in old age or the learned professors have just missed the mark, starting with the issue that in Illinois we don’t usually talk about “an all funds budget deficit.”


  17. - RNUG - Tuesday, Jan 21, 14 @ 5:09 pm:

    JustMe_JMO - Tuesday, Jan 21, 14 @ 2:15 pm:

    The GA, in it’s wisdom or idiocy, made the pension bill mostly non-severable … if significant portions get ruled unconstitutional, it will almost all get tossed.


  18. - lost in the weeds - Tuesday, Jan 21, 14 @ 9:39 pm:

    http://www.wics.com/news/top-stories/stories/vid_15263.shtml

    This headline makes no sense. Pension cuts do nothing? If I take 160 billion in savings and divide by 30 years I get 5.3 billion dollars a year savings.

    Then the article says it will reduce the deficit somewhat.

    Then the article says the deficit will be 13 billion without explaining that it is projected annual deficit ( I am assuming).

    I guess I could read the report and see if it makes sense.

    I guess pension reform was supposed to get rid of the entire structural deficit of the budget not just the pension liabilities. Maybe the retirees can pay the state rather then get a pension so everyone else can have their taxes reduced.

    More math in the classroom is needed.

    gheeeesh.


  19. - HUH? - Wednesday, Jan 22, 14 @ 6:16 am:

    This law will “fix” the problem in 25 years?

    The last law (the payment ramp) gonna fix the problem in 40 years? We are 1/2 way thru the ramp and now we fix the fix?

    HUH?


Sorry, comments for this post are now closed.


* Black radio ad slams Rauner for failure to hire a single African-American at company
* Today's chart
* *** UPDATED x1 - Quinn responds *** Rauner unveils ethics reform plan
* Today's number: 30 percent less likely
* Bigfooted by the Trib
* *** UPDATED x1 - Bustos responds *** Schilling ad attacks Bustos over budget cuts
* *** UPDATED x1 *** SUBSCRIBERS ONLY - Supplement to today’s edition: Crosstabs, TV ads, cable TV buys and an events list
* Quinn moves to second negative track
* Rate Bruce Rauner's new TV ad: "100 years of failure"
* SUBSCRIBERS ONLY - Today's edition of Capitol Fax (use all CAPS in password)
* Yesterday's blog posts

Support CapitolFax.com
Visit our advertisers...

...............

...............


Search This Blog...

Search the 98th General Assembly By Bill Number
(example: HB0001)

Search the 98th General Assembly By Keyword

          
        * Next-gen iPad launch date rumored for next month
        * EyeEm iOS Update Makes It Easier To Choose Your Best Shot
        * Apple offers iPhone migration guide for Android converts
        * iOS 8 compatibility issue forces Dropbox to suspend automatic photo backups
        * Google renames Maps Engine Lite into My Maps
        * This is how LG could improve the new G Flex
        * Apple Watch pricing could easily extend into the thousands of dollars

        * $100 iTunes Card for $75, Cleaner Water, Clearer Sound [Deals]
        * Facebook Said To Be Building New ‘Moments’ App For Private Sharing
        * Using An Apple Watch While Driving Could Be Equal To Using A Mobile Phone
        * Apple 2014 iPad Event Rumored For October 21st
        * Virgin Media’s ‘5x Faster’ Ads Banned
        * This Graphic Shows How to Remove Embarrassing Photos from Social Media
        * iPhone 6 Demand Reportedly Has Foxconn Stretched Thin

        * Following up: Adam Eaton's second half, Chris Sale's schedule
        * Gillaspie, White Sox solve Royals' bullpen
        * White Sox 7, Royals 5: Kansas City bullpen titans falter
        * Sale seeks another stellar start in KC, series win
        * Gillaspie, White Sox solve Royals' bullpen
        * Out call on Viciedo confirmed on replay
        * High hopes, no set plan for Konerko's remaining ABs


        Main Menu
        Home
        Illinois
        YouTube
        Pundit rankings
        Obama
        Subscriber Content
        Durbin
        Burris
        Blagojevich Trial
        Advertising
        Updated Posts
        Polls

        Archives
        September 2014
        August 2014
        July 2014
        June 2014
        May 2014
        April 2014
        March 2014
        February 2014
        January 2014
        December 2013
        November 2013
        October 2013
        September 2013
        August 2013
        July 2013
        June 2013
        May 2013
        April 2013
        March 2013
        February 2013
        January 2013
        December 2012
        November 2012
        October 2012
        September 2012
        August 2012
        July 2012
        June 2012
        May 2012
        April 2012
        March 2012
        February 2012
        January 2012
        December 2011
        November 2011
        October 2011
        September 2011
        August 2011
        July 2011
        June 2011
        May 2011
        April 2011
        March 2011
        February 2011
        January 2011
        December 2010
        November 2010
        October 2010
        September 2010
        August 2010
        July 2010
        June 2010
        May 2010
        April 2010
        March 2010
        February 2010
        January 2010
        December 2009
        November 2009
        October 2009
        September 2009
        August 2009
        July 2009
        June 2009
        May 2009
        April 2009
        March 2009
        February 2009
        January 2009
        December 2008
        November 2008
        October 2008
        September 2008
        August 2008
        July 2008
        June 2008
        May 2008
        April 2008
        March 2008
        February 2008
        January 2008
        December 2007
        November 2007
        October 2007
        September 2007
        August 2007
        July 2007
        June 2007
        May 2007
        April 2007
        March 2007
        February 2007
        January 2007
        December 2006
        November 2006
        October 2006
        September 2006
        August 2006
        July 2006
        June 2006
        May 2006
        April 2006
        March 2006
        February 2006
        January 2006
        December 2005
        April 2005
        March 2005
        February 2005
        January 2005
        December 2004
        November 2004
        October 2004

        Blog*Spot Archives
        November 2005
        October 2005
        September 2005
        August 2005
        July 2005
        June 2005
        May 2005

        Syndication

        RSS Feed 2.0
        Comments RSS 2.0
        WordPress

        Loading


        * More subpoenas for Quinn's anti-violence program..
        * Hinsdale Facebook Probe & Rauner Misstep: Stacy.....
        * Rauner’s Campaign Commercials Need a Little Sha.....
        * Second City Quinn Parody Is Funny Because It Co.....
        * Livestock Briefs: Producers, vets welcome at PE.....
        * Rauner Criticizes Illinois Medical Marijuana Law..


        * 2014 MacArthur 'genius grant' winners unveiled
        * Man charged with murder in Kentucky jailed in Ohio
        * Geneva man 1st Kane County human West Nile case
        * West Frankfort man convicted of burning girlfriend
        * Illinois school installs carbon monoxide detectors
        * Teen eludes electronic monitoring, attacks student
        * APNewsBreak: Chicago DEA chief heading to DC
        * Southwest flight makes emergency landing at Midway
        * McLean County nixes marijuana cultivation center
        * CDC study: Americans' bellies are expanding fast

        * Rauner questions medical marijuana program secrecy
        * New subpoena issued for Quinn’s anti-violence program
        * Evans: Eliminate conflicts of interest in legislature
        * State legislative panel delays decision on fracking rules
        * Quinn: Monitor not needed to oversee state hiring
        * Video of state lawmaker's tirade resurfaces in U.S. House race
        * Rauner’s call for firings of ‘illegal patronage hires’ would affect many in Springfield
        * Quinn, Rauner clash on business, hiring
        * Coaltion forms to push school funding reform
        * Rauner’s education plan raises eyebrows

        * Can he sell Big Macs to millennials?
        * Did Beanie Babies' Ty Warner get off too easy?
        * Was the sentence too light for Beanie Babies' Ty Warner?
        * A cartoonist, a composer, a criminal lawyer: Meet the new 'genius grant' winners
        * A cartoonist, a composer, a criminal lawyer: See the new 'genius grant' winners


        * Fioretti’s old campaign records ‘incomplete and disorganized’
        * Wallenda’s walk — watch it or not?
        * Denied musical instrument, racist prisoner plays world’s smallest violin
        * Wallenda will walk tightrope over Chicago River in November
        * Highland Park teen to be sentenced for running over, killing 5-year-old girl
        * Editorial: Wallenda’s walk — watch it, or not?
        * 15-year-old boy shot, critically injured in West Garfield Park
        * 16-year-old is second person charged in fatal home invasion
        * Flawed reform is better than none
        * CeaseFire worker charged in diamond theft


        * Mother seeks longest sentence possible against 'huffing' crash woman
        * Kane Co. sees first human case of West Nile since 2012
        * Mechanical, health issues force O'Hare flight to Brussels back to Chicago
        * North Shore Center will host Molly Glynn memorial celebration
        * Signs of hope as Uptown struggles with violence
        * Chicago part of citizenship push for legal immigrants
        * Box of bones found in closet at Japanese Consulate
        * New rules: Naperville bars can't offer large discounts on beer
        * Boy, 16, charged in fatal shooting of retired police sergeant
        * Robber points shotgun at homeowner: 'I'm reloaded'


        * Trauma Care Decision Highlights Competition Between Springfield Hospitals
        * Springfield Art Co-Op Founder "Blossoms" On East Coast
        * Springfield Mayor Houston Points Out Sewer Improvements
        * Mayor: We Are Doing Sewer Work
        * N.J. Gov. Christie Stumps For Rauner In Springfield
        * I Like Illinois Website Debuts, In Time For The Election
        * Fracking Rules Action Delayed; Could Be A Sign Of Revision
        * Who Owns The Rights To Vivian Maier's Photos?
        * Legislature Approved A $100 Million Tax On Business & Didn't Know It
        * Schools CEO: privatizing janitorial services not 'as smooth as we would like'


        * Our Opinion: Carbon monoxide alarms belong in schools
        * Rauner questions medical marijuana program secrecy
        * New subpoena issued for Quinn’s anti-violence program
        * Evans: Eliminate conflicts of interest in legislature
        * Michael Gerson: Leading from behind the curve
        * State legislative panel delays decision on fracking rules
        * Quinn: Monitor not needed to oversee state hiring
        * Video of state lawmaker's tirade resurfaces in U.S. House race
        * Rauner’s call for firings of ‘illegal patronage hires’ would affect many in Springfield
        * Another view: New law might boost clothing recycling


        * Senate report: China hacked Transcom contractors 20 times in 2012 and 2013
        * 'Easy Rider' bike going to auction
        * No enterovirus reported in metro-east
        * Both sides report progress in Highland teachers strike; next meeting set for Thursday
        * Athlon: Illini an NCAA tournament team
        * Police run down tips about ambush suspect
        * Gaza widow offers insight into world of spies
        * Accident in Franklin County injures 67-year-old man
        * AP Interview: Iraq premier says no foreign troops
        * MJ's minute: Sept. 17, 2014


        * Scholars at NU, U of C, U of I among MacArthur ‘genius grant' winners
        * List of 2014 MacArthur ‘genius grant' recipients
        * Geneva man recovering from West Nile virus
        * Only 4 states will see cuts to food stamps
        * U.S. crude output surges to highest since 1986 on shale boom

        * Former "youngest member of Congress" to vi...
        * Congressman Aaron Schock Reacts To Preside...
        * Congressman Schock Congratulates Local Her...
        * Local Letter Carrier Honored as a Hero - C...
        * House Votes to Condemn GITMO Detainee Rele...
        * Issa, Capito, Chabot, Meeks, and Schock jo...
        * Letter: Some questions for Schock about In...
        * Schock travels to India to promote humanit...
        * Congressman leads humanitarian trip to Ind...
        * Share Modi's resolve to fight poverty in I...

        * Top Senate Democrat Claims Ebola Could Hav......
        * Scott Air Force Base Finalist for New Air ......
        * Scott Air Force Base Finalist for New Air ......
        * Scott Air Force Base Finalist for New Air ......
        * Scott Air Force Base Finalist for New Air ......

        * Shangri La's Barr al Jissah ResortSpa to o......
        * ISIS fight: Congress to vote on arming Syr......

        * The Left’s Political Network, Exposed in One Chart
        * Op-Ed: Is There A Provider In The House?
        * Tom Tresser, Co-Founder Of The CivicLab, Presenting TIF Information
        * Privacy And Safety A Concern As Illinois Considers Police Body Cameras
        * Obama Administration Threatens To Cut Health Care Subsidies For 360,000
        * Legislative Committee Delays Action On Illinois Fracking Rules
        * Rauner Criticizes Illinois Medical Marijuana Law
        * Feds Issue New Subpoena For Quinn's Anti-Violence Initiative
        * Metro East voters register Casino Queen as home
        * Tryon Named “Legislator of the Year” by Illinois Public Transportation Authority


        * Bruce Rauner Announces Ethics Blueprint
        * Across Illinois, They’re Talking About Pat Quinn’s Corruption
        * New subpoena in federal probe of Quinn anti-violence grant program
        * Rauner calls on Quinn to halt secret medical marijuana licensing
        * BREAKING: Quinn in court filing says no to hiring monitor, stands by cronies




            Hosted by MCS SUBSCRIBE to Capitol Fax Advertise Here Mobile Version Contact Rich Miller