Fun with numbers
Tuesday, Jan 21, 2014
The study is here.
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.