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.


* Unions file suit in St. Clair County
* Reader comments closed for the holiday weekend
* AG Madigan files TRO
* In re James Dimas
* Question of the day
* Weirdest. Oppo Dump. Ever.
* Big bucks reported by Zopp, Raja
* LIVE Comptroller Munger press conference coverage
* Yet another clock starts ticking down
* Hey, Cardinal fans...
* Rauner makes cheery visit to Illinois State Museum
* The Tier 2 difference
* *** UPDATED x4 *** Attorney General goes to court
* Credit Unions – Protecting Financial Futures
* GOP legislator wants "temporary, balanced budget"
* Food for thought
* The blame game
* Meanwhile, in the real world...
* When Indiana invaded Illinois
* 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

          
        * Galaxy Note 5 case, iPhone 6s camera, Apple Watch 2 & more – Pocketnow Daily
        * Swappa launches Play Store app to check the price of your devices
        * Sprint CEO is tired of John Legere’s tweets, and calls Uncarrier BS
        * Bethesda’s Fallout Shelter coming to Android next month
        * Samsung Galaxy S6 Edge+ dummy vs. Galaxy S6 in photos
        * Dolphin Emulator for Android to take advantage of 64-bit ARM technology
        * Is this Blackberry’s first Android smartphone?

        * LG Bluetooth Headset Hits 10 Million Mark…And Counting
        * Transcend Hits Back With A New Line Of USB 3.0 External Hard Drives
        * Play Dragon Quest X On Dospara’s New 15.6-Inch Full HD Gaming Notebook
        * Americans Stream 135 Billion Songs in First Half of Year
        * Drone Used To Help Rescue Trapped Rafters
        * Dubai Office Building & Its Furniture Will Be Completely 3D Printed
        * Apple Music Is Reportedly A Huge Battery Drain

        * Tatis Jr. among White Sox finds on int'l market
        * Sale grabs AL's top pitcher honor for June
        * Tatis Jr. among White Sox finds on int'l market
        * White Sox July 2 signings
        * Tatis Jr. among White Sox finds on int'l market
        * Who will finish second in homers for the 2015 White Sox?
        * White Sox not deterred by delays, top Cards

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


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

        Archives
        July 2015
        June 2015
        May 2015
        April 2015
        March 2015
        February 2015
        January 2015
        December 2014
        November 2014
        October 2014
        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


        * Paying for state's payroll, bills still up in t.....
        * Union lawsuit seeks full pay despite no Illinoi.....
        * Rauner OKs 5 clemency requests, rejects 153 - D.....
        * Tornado victims granted extension to file tax r.....
        * Budget Stalemate Moves To Court As Political Rh.....


        * Could insulin pills prevent diabetes? Big study seeks answer
        * Without a budget, providers prepare, officials go to court
        * Union lawsuit seek full pay despite no Illinois budget
        * Parents of Illinois players don't believe coach allegations
        * Troy man not guilty by reason of insanity in church shooting
        * Indiana law spurs 'fireworks tourism' from Illinoisans
        * U of Illinois freezes administration hiring over budget
        * Chicago teachers protest planned cuts after pension payment
        * Salaita hired in Lebanon after losing U of Illinois offer
        * Illinois River hits record flood stage at Beardstown

        * State employee lawsuit seeks assurance of full pay despite no budget
        * U of I freezes administration hiring over budget
        * Attorney General Lisa Madigan seeks court ruling on state payments during budget impasse
        * Illinois EPA: State has landfill capacity for 21 more years
        * State lawmakers point fingers over budget impasse; temporary budget in limbo
        * Former Illinois treasurer employees under Dan Rutherford sue over firings
        * Lawmakers point fingers over budget impasse; temporary budget in limbo
        * Illinois medical marijuana patients now number 2,600
        * Budget impasse shuts down Lincoln's Challenge program for troubled youths
        * Illinois House defeats 1-month budget; same bill coming from Senate

        * Illinois weathers second day without state budget
        * Yelp calls off sale talks—for now
        * How a Reddit rally generated huge turnout for Sanders in Madison
        * Scott Walker to reveal presidential campaign intentions July 13
        * Sun Trading CEO Bernard Dan steps down


          * Woman with dementia missing from Jefferson Park
          * Police investigate shooting on I-55
          * Body found in garage fire on NW Side
          * Wisconsin Republicans propose limiting public access to records
          * 7 injured in shootings on South, Far South and West sides
          * Hedge fund manager's swank offices concealed a Ponzi scheme
          * Chicago police officers sue over tattoo cover-up rule
          * 6 years in prison for hedge fund trader in Ponzi scheme
          * Podiatrist convicted in Sacred Heart Hospital kickback scheme
          * Scholarships give college-bound homeless students a boost


          * For same-sex marriage opponents, the fight is far from over
          * Emails show Emanuel, top officials aware of Clinton's private address
          * After pension payment, Chicago Public Schools to make $200M in cuts
          * CPS, Emanuel warn of deep cuts, layoffs to school district
          * After marriage equality, what's next for the LGBT movement?
          * The night Chicago politicians spent punching each other in the face
          * The legacy of Willie Dixon on his 100th birthday
          * Supreme Court rules all states must license and recognize same-sex marriages
          * Preckwinkle may reevaluate sales tax plan if Springfield acts on pensions
          * Democratic lawmaker 'mad as hell' over Rauner's veto of state budget


          * State employee lawsuit seeks assurance of full pay despite no budget
          * Our Opinion: Springfield's toilet paper caper exposes the worst and best in people
          * Esther Cepeda: Adding a woman to $10 bill an empty gesture
          * U of I freezes administration hiring over budget
          * Attorney General Lisa Madigan seeks court ruling on state payments during budget impasse
          * Illinois EPA: State has landfill capacity for 21 more years
          * Our Opinion: Winslow looks to heal divisions
          * Bernard Schoenburg: Gov. Rauner's tone has changed, Sen. Andy Manar says
          * George Will: Some GOP candidates becoming unhinged
          * Eugene Robinson: In Charleston, 'the power of God's grace'


          * Langley soars to first-round lead
          * Freshman, father struggle with allegations
          * UI grad Correa pays price
          * High school kickoff countdown: Centennial needs QB
          * 3 youths injured in rollover crash near Colfax
          * Court orders release in drug case
          * UPDATE: Man dies in motorcycle-SUV crash
          * Rantoul teen arrested for allegedly shooting a BB gun at a bicyclist
          * Rantoul man arrested for allegedly shooting a BB gun at a bicyclist
          * Sullivan jogger dies after being hit by a vehicle


          * Military recruits still not using American-made sneakers
          * AP Source: Blazers reach 5-year $120M-plus deal with Lillard
          * Kazmir helps A's blank Mariners 4-0
          * Cardinals lose 3rd in a row, 5-3 to Padres
          * Vice President Joe Biden to attend the World Cup final

          * House lawmakers overcome hurdle on key tra...
          * Rodney Davis talks funding with Bloomingto...
          * The agency that fought Illiana gets a new ...
          * Rep. Dold takes educational cruise down Ch...
          * Lawmakers decry high turnover rate of VA h...
          * CBD Oil, and politics
          * Simon considering state Senate bid
          * Killer Congressman Tom MacArthur trying to...
          * Shutdown? State may not notice
          * Rep. Bob Dold

          * Cuba Embassy - RiverBender.com...
          * Durbin and Kelly want to know petcoke heal......
          * Cuba Embassy - Alton Daily News...
          * Centralia Mayor Stresses Importance of Amt......

          * Families participate in Sen. Kirk's stair ......

          * What should we think if World Cup final gets better ratings than Miss USA?
          * EXTRA: Will ‘Dukes of Hazzard’ become the new ‘Song of the South?’
          * A Failure To Communicate
          * Using Technology to Improve Rural Health Access
          * Sen. Mark Kirk pokes at Eric Holder: Did NSA spy on Congress?
          * Democratic National Committee Executive Committee meeting in Chicago June 8
          * Emily's List hits Chicago June 27: Sebelius, Lisa Madigan, Neely, Finney to speak
          * Feinstein, Chambliss defend phone data snooping to "keep the homeland safe." Durbin has concerns. UPDATED
          * President Obama official schedule and guidance June 6, 2013. North Carolina, California
          * Verizon phone records secretly collected by the National Security Agency


          * State, Teamsters Reach Tentative Agreement - Workers at IDOT, DHS, IDES, and CMS in Cook County to Vote on New Contract
          * Governor Rauner Extends Tax Filing and Payment Deadlines for Businesses and Individuals Impacted by Recent Tornado - Deadlines Pushed to December 31, 2015
          * Illinois EPA Releases Annual Report on Landfill Capacity
          * IDNR Urges Public to Leave Fireworks Displays to Those Who Are Licensed and Trained - Fireworks Show Sponsors Reminded to Check Credentials of Fireworks Vendors
          * Governor Receives Initial Criminal Justice Commission Report




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