* Gov. Pat Quinn is making the rounds of editorial boards. Here’s some of what he said to the Sun-Times…
He’d like to finance a new statewide construction program for roads, bridges and other infrastructure projects by closing corporate tax loopholes. He said he plans to present lawmakers with a list of tax laws for businesses “that I think are loopholes that don’t produce jobs for our state” in hopes of generating money for such projects.
“A lot of the corporations would much rather have us build infrastructure than anything else,” he added.
Quinn said House Speaker Michael Madigan’s proposal to impose a 3-percent surcharge on nearly 14,000 Illinoisans with annual incomes of $1 million or more to generate $1 billion for schools is “worth considering.”
But he stopped short of endorsing it, noting that if lawmakers approve the plan, it would bypass him and go before voters in the form of a constitutional amendment. “Anything like that, the voters have to make the final call,” he said.
Edgar wasn’t the only Republican whom Quinn called for advice about his budget plan. He said he also reached out to former GOP Gov. Jim Thompson.
“He said he would look at our ideas,” Quinn said. “The difference between me and him on this issue is Jim Thompson did things after the election, OK? ‘Ooop, ooop, we need money.’ OK? We’re doing this before the election.”
That’s very true. This may be the first time since the income tax was initialized under Gov. Richard Ogilvie that such a vote will be taken during the spring session. Ogilvie, by the way, ended up losing to Dan Walker.
In a bit of a surprise, Mr. Quinn launched a financial attack on Mr. Rauner’s proposal to immediately stop workers from accruing further pension benefits and switch them to a defined-contribution system like a 401(k).
Even if Mr. Rauner succeeded, Illinois would still owe tens of billions of dollars to retirees for past service that the state is paying in part with retirement contributions withheld every month from the paychecks of current workers. If that revenue stream were diverted from the pension plan to a 401(k) plan, “There’s a tremendous transition cost,” Mr. Quinn said. Just one of the state’s five pension funds, the Teachers Retirement System of Illinois, estimates it would need $32 billion.
“What are you going to do, borrow $32 billion?” Mr. Quinn asked.
Indeed, Mr. Rauner has not released a detailed pension or financial plan; aides say they do not know when one will be available. Instead, he generally has suggested that the pension-reform plan adopted last year by lawmakers was inadequate and has not said whether he would raise other taxes to make up for allowing income-tax rates to drop back.
But another crucial part of the Rauner plan that Quinn didn’t mention is that Rauner would freeze all pensions forever. No more annual increases, ever. It may be heartless, but it does save a ton of dough.
Is this supposed to be snark? Because I think the Governor is being smart here. If he champions the “millionaire’s tax,” then Rauner can go after him one-on-one. As long as it stays in the GA, then Rauner has to fight a battle on two fronts. If the Governor can stay out of this one, it could really help him in November.
===another crucial part of the Rauner plan that Quinn didn’t mention is that Rauner would freeze all pensions forever. No more annual increases, ever. It may be heartless, but it does save a ton of dough.===
Exactly why, Rich, I’ll hold my nose and vote for Quinn.
Same here PublicServant. Typical lesser if two evils choice we seem to get here in Illinois.
Of course if the Supreme’s follow the constitution the present cuts in AAI (not a COLA) passed with SB1 and it goes back to the contractual 3% prior to the law, The Baron’s permanent freeze idea is DOA.
FKA, do you not understand that those rebates are to offset keeping the current tax rates? It isn’t found money, it is a slight give back to make up for our income tax rates not going down. We’d be better off personally with a lower rate, but the state can’t afford that.
Maybe Rich knows, but I’m curious what would happen if teachers’ pensions became 401ks and were no longer qualified plans. Would the state have to pay SS for all the years they’ve worked, or just start paying after the switch. Even if it is the latter, isn’t it cheaper to keep the current setup?
its hard to accuses rauner of flip flopping, bec we dont really know what he would do, beyond repeating his mantra of contradictory platitudes.
so he is more specific here. “freeze pensions forever.” freeze what, exactly? the percentage an employee has earned? so if you are at 30 years and 50%, you get the 50% and nothing more, regardless of additional years of service? or, he freezes the amount. say, 50% of $60 k salary gets you your $30 forever, regardless of additional service? sure sounds like diminishment. bruce has assured us his “plan” is very constitutional. perhaps bec my employee example would be starting from scratch in a 401(k). and those pesky transition costs.
i know, lets start a lottery to help fund education. oops, done that. pass the millionaire tax for education, gets lots more money for schools, then reduce other state funding. voila. more cash for everything else. the madigan plan is lottery-for-education on steroids.
funny, in the midst of all this tax hike talk, everyone is focusing on shiny objects, and no one mentions the backlog of bills any more.
Quinn is campaigning like a challenger, not like an incumbent when he talks like this. Someone in his staff needs to remind him that he is already governor and that he is running for re-election.
While it is easier to tell us what you want, or like, to do in a campaign, what you have to do as an incumbent is tell us what you have done, and what you are doing.
Hey Pat -
Stop it with the “like to do” stuff. Your hands are only as tied as you wish them to be.
We need a governor who does - not would like to do.
- Formerly Known As... - Friday, Mar 28, 14 @ 11:50 am:
Jimbo - surely you jest.
There will be “X” amount of dollars coming in. This new plan proposes sending $500 checks out this summer as part of a “property tax refund”. Instead of “X” dollars, we would then have “X - $600 or $700 million” fewer dollars to budget with.
That means you need to “find” the money to replace it somehow - whether it be program cuts in other areas, increased taxes, etc. It doesn’t just magically replace itself.
=== I think it’s actually $700 million in net new spending for a total of $1.3 billion, but whatever the case, it’s a lot of new money. More cuts in other areas will have to be made to pay for this, and that’s always one of the biggest problems with ideas like these. ===
So when our property taxes go up because of the “pension reforms” which push school pensions back onto property taxes, we will get now get property tax relief to the tune of $500.00?
Why do I still get the impression that all this is still coming out of my own pocket?
So far all I am hearing from Quinn and the Democrats is tax increases. They plan on taxing their way out of the financial mess they presided over for the last dozen yours. I see no real spending cuts on the horizon other than a few tiny nibbles that will be swamped by new spending. And this after telling taxpayers the last major tax increase would be temporary and phased out starting 1/1/15?
Helluva plan for reelection there!
- Grandson of Man - Friday, Mar 28, 14 @ 11:59 am:
I agree with some of you about holding my nose and voting for Quinn. How many nursing homes did THI own, around 220? How much Medicaid and Medicare was misspent in that corporate trainwreck?
Government workers give the taxpayers a fair bang for their bucks. To have someone who took in huge sums of tax dollars want to freeze the modest pensions of thousands of workers is outrageous and cruel.
I don’t think there is any legal way to switch pensions to 401ks retroactively. All you could possibly do is create 401ks going forward - which would mean that all pension-eligible employees would have to be covered by Social Security. That would be a huge hit to school districts. And the State would be required by law to make the full 401k contribution each year, with absolutely no wiggle room. And retirees currently receiving pensions would still receive them, and I believe that all pension benefits up to the day of the switch would still be intact as well.
Long term, the State probably saves money. But the transition would be an expensive nightmare.
===All you could possibly do is create 401ks going forward - which would mean that all pension-eligible employees would have to be covered by Social Security.===
First part is true and is Rauner’s plan. Second part may or may not be true, depending upon the size of the 401K plan.
FKA is closer to the facts. All the current tax money is being spent on either existing programs, pension funding catch-up or lapsed bills catch-up. The property tax rebate takes money away from that, so if you want to maintain the status quo, new tax money equal to the rebate needs to be found or cuts in one of those categories need to be made.
- Arthur Andersen - Friday, Mar 28, 14 @ 12:14 pm:
Mom, from past discussions on related bills, I don’t think that Social Security coverage is ever retroactive.
Keep in mind that the employer is not required to make any contribution whatsoever to a 401K plan. So if the switch is to a 401K, don’t look for the state to ever contribute one more dime to anyone.
Rauner is too vague about his pension proposals to be able to really judge them, but it’s likely a lot of what he is pontificating about would be unconstitutional. Previous ISC rulings have found you can’t go altering the ability to earn the pension under the current rules. Work rule changes that altered the number of years of service that would be possible to accumulate credit have been rejected in the past, so I don’t see any “freeze” making it through the ISC. Of course, the GA did include some of that in SB0001 and it is one of the reasons current workers sued, so you can’t say never.
The timing of the SB0001 decision by the ISC is looking more and more important to this election. It will answer a lot of the uncertainty right now … and if it is before November (unlikely, I think but you never know) it could totally change the playing field. Think about this for a minute: if the ISC says the State can’t touch the pensions no way, no how, for existing employees, effectively negating Rauner’s threat to do so, would you as a state employee or retiree be more or less likely to vote for Rauner or against Quinn?
But if the employer isn’t making ANY contributions to a 401K, I doubt the planned would be considered qualified and they would be required to make SS contributions.
- Formerly Known As... - Friday, Mar 28, 14 @ 12:35 pm:
=== Courageous, indeed. ===
=== It may be heartless ===
I hereby dub this the “Wizard of Oz” election.
We have a Cowardly Lion running against a Tin Man.
One thing that never comes up for TRS is Tier 2… As someone who is solid in Tier 1… These other kids pay as much as I do… With not the same benefit… The math is already upside down… When these youngsters hit 30 or so…and start paying attention… there will be another issue.. Simply put.. It’s people 15 years out they need to hurt while we still have time.. That’s reality… No amount of taxes can be raised for the Ponzi scheme… Just wait until they ask the voters to change the consititution this time…
Didn’t the Illinois Policy Institute say their plan (401K going forward for all employees) paid off the liability? Something about ending the payment ramp and moving to level annual payments around $4 billion.
FKA, no I do not jest. Did you look at the specifics? it isn’t 1.3 billion more, it is 600 million. It doesn’t matter when checks go out, for the purpose of passing a “balanced” budget, the increased revenue from the higher tax rate from Jan 15 to June 15 will more than offset the rebate and EITC increase. Now from a budgeting standpoint, bills will have to be shifted around the sooner they want to send the checks, but that money isn’t coming from programs.
RNUG, yes I see that we would have less than we do at the moment. Still, I don’t understand when folks cry foul about what we’re going to cut, when those same folks were adamant that we couldn’t extend the 5% rate. Instead of thinking we’re extending the 5% rate, look at it as slightly reducing taxes, because we can’t affort to go to 3.75%, but keeping them where they are is politically untenable. I see the property tax and EITC stuff as sweeteners to make the extension more palatable to voters. I think the state needs a progressive tax and needs to tax services, but it appears that in this election year, the most we may be able to get is a modest decline in tax revenue rather than the cliff of dropping rates from 5%.
- Formerly Known As... - Friday, Mar 28, 14 @ 1:32 pm:
- RNUG - Friday, Mar 28, 14 @ 12:13 pm:
Thanks RNUG. I try my best to pay attention. Things may not always sink in, but at least the effort is there lol
The basic concept of this plan may be decent. But unless you are running a surplus or have extra cash socked away in your “rainy day” fund, the fact is this money must come from somewhere.
Keep in mind that the employer is not required to make any contribution whatsoever to a 401K plan. So if the switch is to a 401K, don’t look for the state to ever contribute one more dime to anyone.
Anon- in the state’s case I have heard they would have to put in an amount to make the 401k “equal to or better than” standard Social Security (probably at least the “employer’s share” rate, but I am not a tax accountant so don’t quote me on the amount). No employer can legally get away with not paying for social security AND not putting anything into a 401k for their employees. Many here have been saying for a few years now that the Tier 2 employees setup will un afoul with social security rules in just a few years, causing the state to have to start paying into SS, and that is with the state putting money into Tier 2 pensions.
“Close corporate loopholes” in order to fund….(insert your goody list). One of PQs favorite songs, but not many others. So not likely to pass. Infrastructure might be a shiny object to appeal to unions, and legislators getting projects, but it needs a better funding source.
The pension legislation Quinn pushed for and signed takes away 78% of my pension cost of living increases. If the courts uphold it, I am not holding my breath that Madigan, Cullerton, Quinn et. al. won’t go after what little of my AAI remains. Please forgive me if I fail to see much difference in heartlessness between Rauner and Quinn.
1. Employee contributions SHOULD NEVER be used to fund legacy costs. If Quinn is saying that they’re using current employees’ contributions to pay benefits for retired workers, he’s admitted it’s a ponzi scheme. (We can solve the pension crisis if every retiree finds 10 friends, and each of them finds 10 friends, and so on!) Employee contributions are meant to be for the normal cost of their own benefits as they earn them.
2. You’re paying debt service either way. The state’s contribution consists of both debt service and normal cost. Provided that the DC plan has a normal cost less than or equal to the DB plan, no extra infusion of cash should be necessary. Though if the state DID put up some extra cash early on, or pay as a level dollar, it would SAVE money in the long term. (It’s like you’re paying down more principal on your mortgage.)
3. Looks like Quinn, TRS, etc. assume that a closed pension system must be fully funded immediately. Simply not true. They can stick to a 30-year funding plan and be just fine. (Funding actually gets easier over time, as the legacy liability declines each and every year, instead of increasing as it does now, and there’s NO liability for DC plans other than the % of pay employer contributions.) Passing meaningful changes to COLA will also make it much easier.
- Formerly Known As... - Friday, Mar 28, 14 @ 2:42 pm:
- RNUG - Friday, Mar 28, 14 @ 1:06 pm:
Good point. Better yet, great point. Speaking seriously for a moment, heart counts immensely. Courage and brains are critical as well, but voters need to know a candidate has that third component.
Separately, Rauner’s “‘courage’ to take on Springfield” and Quinn’s “‘heart’ for the little guy” will play major roles in portraying contrasts and telling the story of this election come November.
To more important issues - perhaps Scarecrow would have been more appropriate for Quinn?
Spkr. Madigan obviously plays the Wizard, while the “mushrooms” can fill the role of Munchkins and the lollipop guild. Are we missing anyone else?
- Formerly Known As... - Friday, Mar 28, 14 @ 11:01 am:
Add the fact we have to pay for proposed $500 property tax rebates as well, and we’re talking about “finding” some serious coin.
- Soccermom - Friday, Mar 28, 14 @ 11:08 am:
“Courageous, indeed.”
Is this supposed to be snark? Because I think the Governor is being smart here. If he champions the “millionaire’s tax,” then Rauner can go after him one-on-one. As long as it stays in the GA, then Rauner has to fight a battle on two fronts. If the Governor can stay out of this one, it could really help him in November.
- PublicServant - Friday, Mar 28, 14 @ 11:11 am:
===another crucial part of the Rauner plan that Quinn didn’t mention is that Rauner would freeze all pensions forever. No more annual increases, ever. It may be heartless, but it does save a ton of dough.===
Exactly why, Rich, I’ll hold my nose and vote for Quinn.
- Roadiepig - Friday, Mar 28, 14 @ 11:21 am:
Same here PublicServant. Typical lesser if two evils choice we seem to get here in Illinois.
Of course if the Supreme’s follow the constitution the present cuts in AAI (not a COLA) passed with SB1 and it goes back to the contractual 3% prior to the law, The Baron’s permanent freeze idea is DOA.
- Jimbo - Friday, Mar 28, 14 @ 11:24 am:
FKA, do you not understand that those rebates are to offset keeping the current tax rates? It isn’t found money, it is a slight give back to make up for our income tax rates not going down. We’d be better off personally with a lower rate, but the state can’t afford that.
- Jimbo - Friday, Mar 28, 14 @ 11:26 am:
Maybe Rich knows, but I’m curious what would happen if teachers’ pensions became 401ks and were no longer qualified plans. Would the state have to pay SS for all the years they’ve worked, or just start paying after the switch. Even if it is the latter, isn’t it cheaper to keep the current setup?
- langhorne - Friday, Mar 28, 14 @ 11:27 am:
its hard to accuses rauner of flip flopping, bec we dont really know what he would do, beyond repeating his mantra of contradictory platitudes.
so he is more specific here. “freeze pensions forever.” freeze what, exactly? the percentage an employee has earned? so if you are at 30 years and 50%, you get the 50% and nothing more, regardless of additional years of service? or, he freezes the amount. say, 50% of $60 k salary gets you your $30 forever, regardless of additional service? sure sounds like diminishment. bruce has assured us his “plan” is very constitutional. perhaps bec my employee example would be starting from scratch in a 401(k). and those pesky transition costs.
i know, lets start a lottery to help fund education. oops, done that. pass the millionaire tax for education, gets lots more money for schools, then reduce other state funding. voila. more cash for everything else. the madigan plan is lottery-for-education on steroids.
funny, in the midst of all this tax hike talk, everyone is focusing on shiny objects, and no one mentions the backlog of bills any more.
- Keyser Soze - Friday, Mar 28, 14 @ 11:30 am:
Do corporations want tax loop holes closed so that the government can build more infrastructure? Did I just read that?
- VanillaMan - Friday, Mar 28, 14 @ 11:41 am:
Quinn is campaigning like a challenger, not like an incumbent when he talks like this. Someone in his staff needs to remind him that he is already governor and that he is running for re-election.
While it is easier to tell us what you want, or like, to do in a campaign, what you have to do as an incumbent is tell us what you have done, and what you are doing.
Hey Pat -
Stop it with the “like to do” stuff. Your hands are only as tied as you wish them to be.
We need a governor who does - not would like to do.
- Formerly Known As... - Friday, Mar 28, 14 @ 11:50 am:
Jimbo - surely you jest.
There will be “X” amount of dollars coming in. This new plan proposes sending $500 checks out this summer as part of a “property tax refund”. Instead of “X” dollars, we would then have “X - $600 or $700 million” fewer dollars to budget with.
That means you need to “find” the money to replace it somehow - whether it be program cuts in other areas, increased taxes, etc. It doesn’t just magically replace itself.
But don’t take my word for it. Just make sure to read CapFax every day. Like yesterday: https://capitolfax.com/2014/03/27/about-that-property-tax-proposal/
=== I think it’s actually $700 million in net new spending for a total of $1.3 billion, but whatever the case, it’s a lot of new money. More cuts in other areas will have to be made to pay for this, and that’s always one of the biggest problems with ideas like these. ===
- cod - Friday, Mar 28, 14 @ 11:54 am:
Rauners’s 401-k pension scheme seems designed to ensure that republican teachers (estimated to be a third of all teachers) do not vote for him.
That is a real mystery. Why not just shut up for now, and reward his fellow financial friends after he is elected?
- Louis G. Atsaves - Friday, Mar 28, 14 @ 11:58 am:
So when our property taxes go up because of the “pension reforms” which push school pensions back onto property taxes, we will get now get property tax relief to the tune of $500.00?
Why do I still get the impression that all this is still coming out of my own pocket?
So far all I am hearing from Quinn and the Democrats is tax increases. They plan on taxing their way out of the financial mess they presided over for the last dozen yours. I see no real spending cuts on the horizon other than a few tiny nibbles that will be swamped by new spending. And this after telling taxpayers the last major tax increase would be temporary and phased out starting 1/1/15?
Helluva plan for reelection there!
- Grandson of Man - Friday, Mar 28, 14 @ 11:59 am:
I agree with some of you about holding my nose and voting for Quinn. How many nursing homes did THI own, around 220? How much Medicaid and Medicare was misspent in that corporate trainwreck?
Government workers give the taxpayers a fair bang for their bucks. To have someone who took in huge sums of tax dollars want to freeze the modest pensions of thousands of workers is outrageous and cruel.
- Soccermom - Friday, Mar 28, 14 @ 12:02 pm:
I don’t think there is any legal way to switch pensions to 401ks retroactively. All you could possibly do is create 401ks going forward - which would mean that all pension-eligible employees would have to be covered by Social Security. That would be a huge hit to school districts. And the State would be required by law to make the full 401k contribution each year, with absolutely no wiggle room. And retirees currently receiving pensions would still receive them, and I believe that all pension benefits up to the day of the switch would still be intact as well.
Long term, the State probably saves money. But the transition would be an expensive nightmare.
- Rich Miller - Friday, Mar 28, 14 @ 12:04 pm:
===All you could possibly do is create 401ks going forward - which would mean that all pension-eligible employees would have to be covered by Social Security.===
First part is true and is Rauner’s plan. Second part may or may not be true, depending upon the size of the 401K plan.
- RNUG - Friday, Mar 28, 14 @ 12:13 pm:
- Jimbo - Friday, Mar 28, 14 @ 11:24 am:
FKA is closer to the facts. All the current tax money is being spent on either existing programs, pension funding catch-up or lapsed bills catch-up. The property tax rebate takes money away from that, so if you want to maintain the status quo, new tax money equal to the rebate needs to be found or cuts in one of those categories need to be made.
- Arthur Andersen - Friday, Mar 28, 14 @ 12:14 pm:
Mom, from past discussions on related bills, I don’t think that Social Security coverage is ever retroactive.
- Anon - Friday, Mar 28, 14 @ 12:25 pm:
Keep in mind that the employer is not required to make any contribution whatsoever to a 401K plan. So if the switch is to a 401K, don’t look for the state to ever contribute one more dime to anyone.
- RNUG - Friday, Mar 28, 14 @ 12:29 pm:
Rauner is too vague about his pension proposals to be able to really judge them, but it’s likely a lot of what he is pontificating about would be unconstitutional. Previous ISC rulings have found you can’t go altering the ability to earn the pension under the current rules. Work rule changes that altered the number of years of service that would be possible to accumulate credit have been rejected in the past, so I don’t see any “freeze” making it through the ISC. Of course, the GA did include some of that in SB0001 and it is one of the reasons current workers sued, so you can’t say never.
The timing of the SB0001 decision by the ISC is looking more and more important to this election. It will answer a lot of the uncertainty right now … and if it is before November (unlikely, I think but you never know) it could totally change the playing field. Think about this for a minute: if the ISC says the State can’t touch the pensions no way, no how, for existing employees, effectively negating Rauner’s threat to do so, would you as a state employee or retiree be more or less likely to vote for Rauner or against Quinn?
- RNUG - Friday, Mar 28, 14 @ 12:32 pm:
- Anon - Friday, Mar 28, 14 @ 12:25 pm:
But if the employer isn’t making ANY contributions to a 401K, I doubt the planned would be considered qualified and they would be required to make SS contributions.
- Formerly Known As... - Friday, Mar 28, 14 @ 12:35 pm:
=== Courageous, indeed. ===
=== It may be heartless ===
I hereby dub this the “Wizard of Oz” election.
We have a Cowardly Lion running against a Tin Man.
- zatoichi - Friday, Mar 28, 14 @ 12:44 pm:
‘Freeze all pensions forever’. Excellent plan to recruit good employees and maintain the people who know how to make the system run day to day.
- Walter Mitty - Friday, Mar 28, 14 @ 12:48 pm:
One thing that never comes up for TRS is Tier 2… As someone who is solid in Tier 1… These other kids pay as much as I do… With not the same benefit… The math is already upside down… When these youngsters hit 30 or so…and start paying attention… there will be another issue.. Simply put.. It’s people 15 years out they need to hurt while we still have time.. That’s reality… No amount of taxes can be raised for the Ponzi scheme… Just wait until they ask the voters to change the consititution this time…
- Dad - Friday, Mar 28, 14 @ 12:56 pm:
Didn’t the Illinois Policy Institute say their plan (401K going forward for all employees) paid off the liability? Something about ending the payment ramp and moving to level annual payments around $4 billion.
- RNUG - Friday, Mar 28, 14 @ 1:06 pm:
- Formerly Known As… - Friday, Mar 28, 14 @ 12:35 pm:
At least the Cowardly Lion seems to have a heart part of the time …
- Jimbo - Friday, Mar 28, 14 @ 1:17 pm:
FKA, no I do not jest. Did you look at the specifics? it isn’t 1.3 billion more, it is 600 million. It doesn’t matter when checks go out, for the purpose of passing a “balanced” budget, the increased revenue from the higher tax rate from Jan 15 to June 15 will more than offset the rebate and EITC increase. Now from a budgeting standpoint, bills will have to be shifted around the sooner they want to send the checks, but that money isn’t coming from programs.
- Jimbo - Friday, Mar 28, 14 @ 1:23 pm:
RNUG, yes I see that we would have less than we do at the moment. Still, I don’t understand when folks cry foul about what we’re going to cut, when those same folks were adamant that we couldn’t extend the 5% rate. Instead of thinking we’re extending the 5% rate, look at it as slightly reducing taxes, because we can’t affort to go to 3.75%, but keeping them where they are is politically untenable. I see the property tax and EITC stuff as sweeteners to make the extension more palatable to voters. I think the state needs a progressive tax and needs to tax services, but it appears that in this election year, the most we may be able to get is a modest decline in tax revenue rather than the cliff of dropping rates from 5%.
- Jimbo - Friday, Mar 28, 14 @ 1:29 pm:
afford not affort. Ugh
- Formerly Known As... - Friday, Mar 28, 14 @ 1:32 pm:
- RNUG - Friday, Mar 28, 14 @ 12:13 pm:
Thanks RNUG. I try my best to pay attention. Things may not always sink in, but at least the effort is there lol
The basic concept of this plan may be decent. But unless you are running a surplus or have extra cash socked away in your “rainy day” fund, the fact is this money must come from somewhere.
- Roadiepig - Friday, Mar 28, 14 @ 2:15 pm:
- Anon - Friday, Mar 28, 14 @ 12:25 pm:
Keep in mind that the employer is not required to make any contribution whatsoever to a 401K plan. So if the switch is to a 401K, don’t look for the state to ever contribute one more dime to anyone.
Anon- in the state’s case I have heard they would have to put in an amount to make the 401k “equal to or better than” standard Social Security (probably at least the “employer’s share” rate, but I am not a tax accountant so don’t quote me on the amount). No employer can legally get away with not paying for social security AND not putting anything into a 401k for their employees. Many here have been saying for a few years now that the Tier 2 employees setup will un afoul with social security rules in just a few years, causing the state to have to start paying into SS, and that is with the state putting money into Tier 2 pensions.
- Langhorne - Friday, Mar 28, 14 @ 2:18 pm:
“Close corporate loopholes” in order to fund….(insert your goody list). One of PQs favorite songs, but not many others. So not likely to pass. Infrastructure might be a shiny object to appeal to unions, and legislators getting projects, but it needs a better funding source.
- Andrew Szakmary - Friday, Mar 28, 14 @ 2:22 pm:
The pension legislation Quinn pushed for and signed takes away 78% of my pension cost of living increases. If the courts uphold it, I am not holding my breath that Madigan, Cullerton, Quinn et. al. won’t go after what little of my AAI remains. Please forgive me if I fail to see much difference in heartlessness between Rauner and Quinn.
- Up - Friday, Mar 28, 14 @ 2:30 pm:
1. Employee contributions SHOULD NEVER be used to fund legacy costs. If Quinn is saying that they’re using current employees’ contributions to pay benefits for retired workers, he’s admitted it’s a ponzi scheme. (We can solve the pension crisis if every retiree finds 10 friends, and each of them finds 10 friends, and so on!) Employee contributions are meant to be for the normal cost of their own benefits as they earn them.
2. You’re paying debt service either way. The state’s contribution consists of both debt service and normal cost. Provided that the DC plan has a normal cost less than or equal to the DB plan, no extra infusion of cash should be necessary. Though if the state DID put up some extra cash early on, or pay as a level dollar, it would SAVE money in the long term. (It’s like you’re paying down more principal on your mortgage.)
3. Looks like Quinn, TRS, etc. assume that a closed pension system must be fully funded immediately. Simply not true. They can stick to a 30-year funding plan and be just fine. (Funding actually gets easier over time, as the legacy liability declines each and every year, instead of increasing as it does now, and there’s NO liability for DC plans other than the % of pay employer contributions.) Passing meaningful changes to COLA will also make it much easier.
- Formerly Known As... - Friday, Mar 28, 14 @ 2:42 pm:
- RNUG - Friday, Mar 28, 14 @ 1:06 pm:
Good point. Better yet, great point. Speaking seriously for a moment, heart counts immensely. Courage and brains are critical as well, but voters need to know a candidate has that third component.
Separately, Rauner’s “‘courage’ to take on Springfield” and Quinn’s “‘heart’ for the little guy” will play major roles in portraying contrasts and telling the story of this election come November.
To more important issues - perhaps Scarecrow would have been more appropriate for Quinn?
Spkr. Madigan obviously plays the Wizard, while the “mushrooms” can fill the role of Munchkins and the lollipop guild. Are we missing anyone else?
- RNUG - Friday, Mar 28, 14 @ 2:47 pm:
FKA,
We haven’t accounted for Dorothy or Toto yet …